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Talk of the Day--FPG plant closure to impact global textile output

2011/05/28 22:34:47

In an unprecedented move, the Yunlin county government hasordered Formosa Plastics Group (FPG) to shut down six petrochemicalplants in the central-south county's coastal regions from June 1 oversafety concern.

The plants in question should remain closed until the countygovernment and the Cabinet-level Council of Labor Affairs decide thatsafety measures have been adequately improved, Yunlin Magistrate SuChih-fen said Friday.

The county government issued the unusually harsh penalty to oneof world's largest petrochemical groups after two fires at FPG plantsin Yunlin's Mailiao industrial zone on May 12 and May 18.

It is the most severe punishment imposed by a local government ona business group in recent memory.

FPG senior executives were caught off-guard by the countygovernment's decision and said the punitive move will deal a seriousblow to the downstream petrochemical industry, with the textilesector taking the brunt of the impact.

The following are excerpts of the local media coverage of theissue:

United Daily News:

The Mailiao industrial zone covers an area of 2,600 hectares andaccommodates 66 petrochemical plants belonging to 18 companies,including FPG's flagship companies Formosa Plastics Corp. and NanyaPlastics Corp.

The Yunlin county government ordered Formosa Plastics to shutdown its 12-hectare vinyl chloride (VCM) plant at the Mailiaopetrochemical complex from June 1. The plant produces PVC and otherimportant plastic materials. Its closure will seriously affectdownstream petrochemical production.

Worse still, the county government also told Nanya Plastics toshut down its 50-hectare Haifeng factory compound from the same date.

The Haifeng compound houses five production lines that churn out anumber of key textile materials and petrochemical intermediaries,including butanediol glycol (BG), ethylene glycol (EG) and bisphenolA (BPA).

FPG Chairman Wang Wen-yuan called an emergency meeting on Fridayto work out response measures.

A spokesman said the group will send representatives to Yunlinnext Monday to seek compromises or leniency, because suspension of somany plants at the same time could deal a grave blow to thepetrochemical sector.

Some sections of a Nanya plant in the Mailiao complex havesuspended production since the May 12 fire pending safetyinspections. (May 28, 2011).

Commercial Times:

Nanya's Haifeng compound has five plants producing EG, 1.4BG, BPAand INA.

Nanya is the world's fourth largest EG producer, with itsMailiao and Haifeng factories churning out a total of 180 tons of thechemical annually.

The Haifeng compound's shutdown would affected the global EGsupply and dealt a drastic blow to the downstream synthetic fiberindustry, market analysts said.

They also estimated that Nanya's monthly sales could decline byNT$8 billion to NT$10 because of the Haifeng complex closure. (May28, 2011).

China Times:

Formosa Plastics Corp.'s VCM plant could produce 800,000 tons ofpetrochemical materials a year. The plant has been closed since May12 fire. Its shutdown will affect Nanya's operations because VCM isan important ingredient in production of PVC and many other plasticitems. (May 28, 2011).

(By Sofia Wu)