Lawmaker urges probe into FPCC over plastics supply crunch

Taipei, April 1 (CNA) A ruling Democratic Progressive Party (DPP) lawmaker on Wednesday called for a government probe into Formosa Petrochemical Corp. (FPCC) over suspected output cuts and possible stockpiling of key petrochemical feedstocks amid a plastics shortage in Taiwan.

At a news conference, DPP Legislator Chung Chia-pin (鍾佳濱) alleged that Formosa Plastics Group's polyolefin division reduced supply to downstream clients twice in March and raised prices, citing upstream constraints in ethylene and propylene.

Chung said the division notified customers on March 2 that supply would be halved, citing planned production cuts by upstream supplier FPCC, just days after tensions in the Middle East escalated.

He questioned the timing of the move, saying such an early and steep reduction could have triggered panic buying and driven up prices.

Chung said that a second notice on March 10 cut supply further to 25 percent of contracted volumes and raised prices by NT$10.5 (US$0.33) per kilogram, with the remaining quota to be released depending on market conditions.

He accused the company of creating artificial shortages to drive up prices, potentially violating Article 251 of the Criminal Code on hoarding.

He added the situation had spillover effects on CPC Corp., Taiwan, which suspended orders for some solvent chemicals starting March 10.

FPCC and Formosa Plastics rejected the allegations, saying price increases were driven by surging upstream costs amid Middle East disruptions.

Formosa Plastics said CPC's ethylene contract price jumped 46 percent in March from US$792 to US$1,155 per metric ton, while its own average polyethylene price increase was about NT$6.75 per kilogram (around US$210 per metric ton), with part of the cost absorbed to ease pressure on domestic users.

The company also said it supplied more polyethylene to domestic customers in March than in previous months and maintained full deliveries despite a roughly 10 percent drop in ethylene output caused by feedstock shortages.

Both companies said they would cooperate with any investigation and denied engaging in hoarding or price manipulation.

Responding at a legislative committee session, Investigation Bureau Deputy Director-General Wu Fu-mei (吳富梅) said authorities would look into the matter if production cuts were found to have caused shortages or market manipulation.