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  • Dec 21, 2014
  • Updated: 7:29am
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PETROCHEMICALS

Far Eastern looks west for growth

PUBLISHED : Thursday, 18 April, 2013, 12:00am
UPDATED : Thursday, 18 April, 2013, 5:33am

Taiwanese conglomerate Far Eastern Group is eyeing the development of petrochemical plants in the United States, fuelled by cheap energy as the US exploits its shale gas reserves, company's chairman and chief executive says.

Douglas Tong Hsu told the Post: "We are now looking at investing in the US" on the back of the growth of shale gas energy projects.

The plants would potentially cost hundreds of millions of US dollars to build, but Hsu said shale gas will "potentially be one of the cheapest sources of energy. It changes a lot".

He said the US plants, if they go ahead, would produce paraxylene (PX) and purified terephthalic acid (PTA). PX is the main feedstock for PTA, which is used to make polyester products including fibre, food and beverage containers and textiles.

Far Eastern's interests include petrochemicals, shipping, textiles, construction and retail. It operates similar plants in Taiwan and on the mainland through subsidiaries Oriental Petrochemical (Taiwan) and Oriental Petrochemical (Shanghai).

Three years ago, the firm announced plans to spend NT$20 billion (HK$5.2 billion) to double the capacity of its PTA plants in Taoyuan, in northern Taiwan, and in Shanghai, which would make it the second-biggest PTA manufacturer in Asia.

Hsu said the firm had been invited to look at sites in the US, including in North Carolina. He said project teams had been put together to investigate sites whenever "something serious" was proposed.

He declined to be drawn on whether any of the sites were favoured, saying each area was different and that the project team would investigate "whether the cost advantage is there".

Hsu said cheap energy, which the development of extensive shale gas reserves in the US is predicted to create, was key to Far Eastern's US investment plans.

"If the [cost of] raw materials is lowest, then we'll have to go [and invest in the US]", Hsu said.

He said the main issue would be shipping the chemicals to Asia, where their users are.

Oil giant BP said: "Worldwide demand for PTA, driven primarily by Asia, is growing at about 8 per cent and is expected to be strong in the foreseeable future."

But the prices of the chemicals in Asia have come under pressure this year amid weak demand and a glut of PTA in China.

Industry estimates suggest the country will have a production capacity of 38 million tonnes of PTA a year next year, up from 26 million tonnes last year.

The price of chemical raw materials such as PX and PTA fell 3.1 per cent in the first quarter of this year from last year, according to the mainland's statistics bureau.

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