 2011-08-03 |
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(Times Reporter Ho Mei-Ju, Taipei) YC (4306) is expected to see strong operational performance in the second half of the year. Chairman Lee Chih-Hsien mentioned that the shutdown of Formosa Plastics' Sixth Naphtha Cracker Plant in Mailiao will drive up petrochemical product prices, and the increase in BOPP film prices, reflecting rising raw material costs, will positively impact operations. Since 70% of the primary film material, polypropylene (PP), is sourced from abroad, the shutdown has little effect. The internal team noted that the shutdown has caused a strong rebound in propylene prices, which has also driven up film prices, currently reaching USD 2,050 per metric ton. The upward trend is expected to continue through the second half of the year, potentially surpassing the Q1 high of USD 2,250 per metric ton, leading to stronger performance compared to the first half.
YC stated that, for film production in Taiwan, 70% of the raw materials come from suppliers in Singapore and 30% from Formosa Plastics Group. With approximately one month of safety stock, if there is a raw material shortage, additional materials can be sourced from abroad, minimizing the impact of the shutdown. Regarding prices, the rising raw material costs can be passed on to product pricing. Film prices have surged alongside the rebound in propylene prices, and the company expects the price increase effect to be visible in August’s performance.
Film prices peaked at USD 2,250 per metric ton in April this year but dropped to USD 1,880 following a decline in oil prices. With downstream inventory levels low, prices quickly rebounded to USD 1,950 in July, reaching USD 2,050 in recent days. Internal estimates suggest that prices will rise to USD 2,100 next week, with an upward trend expected in Q3 and Q4, likely surpassing the previous high of USD 2,250. Currently, YC operates five BOPP film production lines, each with a monthly capacity of 2,500 to 3,000 metric tons. The new film production line in Changbin Industrial Park, with a monthly output of 3,000 metric tons, is expected to start production in October to capitalize on growth opportunities, pushing the company’s annual production to 160,000 metric tons.
Regarding ACHEM's tape products, the primary raw materials are BOPP film and adhesive. The film is mainly supplied by YC, and the new production line expected to launch by the end of the year will be sufficient to meet ACHEM's demand. Adhesive materials are primarily sourced from Formosa Plastics, but the company plans to shift to sourcing from international chemical giants. Lee Chih-Hsien mentioned that the main customers are international companies, and new contracts have been drafted. Prices will increase starting in July, and profitability is expected to improve in the second half of the year. |
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