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MarketScreener Homepage  >  Equities  >  Taiwan Stock Exchange  >  Formosa Petrochemical Corporation    6505   TW0006505001

FORMOSA PETROCHEMICAL CORPORATION

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Taiwan's Formosa to export more low sulphur fuel oil after rule change

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01/30/2020 | 07:00am EDT

Taiwan's Formosa Petrochemical Corp said on Thursday it will continue exporting very low-sulphur fuel oil (VLSFO), which it previously only sold at home, in response to strong demand driven by new global shipping regulations.

The rules, which came into effect this year, have resulted in levels of demand for VLSFO which have not been seen before.

Weak gasoline prices have led Formosa, which operates one of Asia's ten largest refineries, to lower throughput at its residue fluid catalytic crackers (RFCC) and, since the fourth quarter of 2019, to start exporting VLSFO.

A spokesman for Formosa told Reuters it may shut a secondary unit sooner than planned if poor gasoline demand persists.

Even before the outbreak of the new coronavirus, which originated in Wuhan, China, gasoline profit margins were already weighed down by heavy supplies late last year.

Formosa had initially scheduled to shut an 84,000 bpd unit on March 10 for a 40 to 45-day maintenance.

"If the gasoline cracks (to Dubai) were to remain at an average of $4 to $5 a barrel like what they are now, we may bring forward the maintenance by about 10 days to March 1," K.Y. Lin said, adding that it may extend the shutdown to 50 days.

Formosa will be operating its RFCCs at a reduced throughput of below 80% capacity in February and will be exporting approximately four to five medium range (MR) vessels of VLSFO next month, up from around 3-4 vessels this month.

"We will continue exporting VLSFO as long as gasoline is weak," Lin said, adding it was hard to predict how gasoline fundamentals will turn out in the next month or so.

The severe acute respiratory syndrome (SARS) outbreak 17 years ago showed that a fast-spreading virus can hit not only transportation demand but the economy as a whole.

Formosa operates two RFCCs, each of which has the same capacity at its 540,000 bpd Mailiao refinery. It also operates three 180,000 bpd crude distillation units (CDUs), two sulphur remover units (RDS) and several other secondary units.

Scheduled maintenance at one CDU and one RDS will still take place from March 10, Lin said.

By Seng Li Peng

Stocks mentioned in the article
ChangeLast1st jan.
FORMOSA PETROCHEMICAL CORPORATION 0.99% 81.4 End-of-day quote.0.87%
LONDON BRENT OIL 17.55% 34.89 Delayed Quote.-65.55%
WTI 16.65% 28.79 Delayed Quote.-66.58%
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Financials (TWD)
Sales 2020 537 B
EBIT 2020 33 882 M
Net income 2020 34 320 M
Finance 2020 68 642 M
Yield 2020 3,73%
P/E ratio 2020 21,2x
P/E ratio 2021 17,3x
EV / Sales2020 1,25x
EV / Sales2021 1,08x
Capitalization 743 B
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Mean consensus UNDERPERFORM
Number of Analysts 13
Average target price 82,87  TWD
Last Close Price 78,00  TWD
Spread / Highest target 47,4%
Spread / Average Target 6,25%
Spread / Lowest Target -25,6%
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Managers
NameTitle
Ming Tsao General Manager & Director
Pao Lang Chen Chairman
Chien Tang Tsai Chief Financial Officer & Deputy Spokesman
Yu Cheng Independent Director
Wen Yuan Wang Executive Director
Sector and Competitors
1st jan.Capitalization (M$)
FORMOSA PETROCHEMICAL CORPORATION0.87%25 644
EXXON MOBIL CORPORATION-43.81%160 696
RELIANCE INDUSTRIES LTD0.00%87 657
BP PLC-28.48%86 123
CHINA PETROLEUM & CHEMICAL CORPORATION2.14%72 348
PTT2.50%26 847