Case Study: Chemical Sourcing from Taiwan

Linyuan Petrochemical Complex, Linyuan district office

We recently completed a chemical sourcing project from Taiwan, following up on our earlier analysis of RCEP’s impact on Taiwan’s business landscape. This project involved sourcing three specific chemicals - BOPP, DOTP, and Phthalic Anhydride - from two different suppliers.

Understanding Taiwan’s Chemical Industry

Types of Chemicals

1. Commodity Chemicals
2. Fine Chemicals
3. Specialty Chemicals

Industry Structure

The petrochemical industry is divided into three segments:

1. Upstream

   • Crude oil
   • Gasoline
   • Diesel
   • Lubricating oil
   • Drilling equipment

2. Midstream

   • Basic petrochemical raw materials
   • Products from cracking:
     • Ethylene
     • Propylene
     • Butadiene
     • Benzene
     • Phenol

3. Downstream

   • Processed products:
     • Plastic products
     • Rubber products
     • Detergents
     • Artificial fibers
     • Paint
     • Adhesives
     • Plasticizers
     • Pesticides
     • Cosmetics

Taiwan’s Petrochemical Evolution

Historical Development

• 1957: Formosa Plastics Group (FPG) established first plant in Kaohsiung
• Initial focus on PVC production
• Developed from downstream to upstream capabilities
• FPG became world’s 6th largest chemicals producer
  • 110,000+ employees
  • US$77.5 billion annual sales

Current Capacity

• 5 naphtha crackers
• Total ethylene capacity: 4.0 million mt per annum
• Key operators:
  • CPC: 2 crackers in Linyuan (1.0 million mt)
  • Formosa: 3 crackers in Mailiao (3.9 million mt)

Industry Transformation

Environmental Challenges

• Increasing environmental concerns
• Public protests against new facilities
• Population density concerns
• Shift away from highly polluting operations

Strategic Pivot

Taiwan’s petrochemical industry is transitioning to:

• High-tech specialty chemicals
• Performance chemicals
• Value-added products

Project Details: Sourcing Three Key Chemicals

1. DOTP (Dioctyl terephthalate)

• Properties:
  • Excellent plasticizer
  • Superior electrical properties
  • High thermal stability
• Applications:
  • Cable insulation
  • Electronics manufacturing
  • High demand due to pandemic-driven electronics boom

2. BOPP (Biaxially oriented polypropylene)

• Manufacturing:
  • Derived from Polypropylene (PP)
  • Two production methods:
    • Tenter process
    • Tubular process
• Applications:
  • Food packaging
  • Labels and stickers
  • Water-resistant printing

3. PA (Phthalic Anhydride)

• Key industrial chemical
• Global production: ~3 million tons annually
• Uses:
  • Plasticizer production
  • Dye manufacturing
  • Pharmaceutical industry

Project Challenges

1. Technical Knowledge

• Required thorough research
• Industry-specific terminology
• Complex product specifications

2. Corporate Navigation

• Large organizational structures
• Multiple departments
• Finding right decision-makers

3. Logistics Issues

• High sea freight rates
• Container shortages
• Price competition with Korean suppliers

Key Learnings

1. Industry Interconnections

   • Similar patterns across sectors
   • Transferable experience
   • Network value

2. Relationship Building

   • Supplier cooperation
   • Patient client communication
   • Long-term partnerships

3. Market Evolution

   • Environmental considerations
   • Technology shifts
   • Value-added focus

Looking Forward

Taiwan’s chemical industry continues to evolve, focusing on:

• Specialty chemicals
• High-tech applications
• Sustainable practices
• Value-added products

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References

1. Polyvinyl Chloride Industry
2. Taiwan Petrochemical Industry Outlook
3. Specialty Chemicals Evolution
4. Chemical Properties Database