Taiwan Styrene Monomer Corp (台苯), which makes styrene monomer, yesterday said that because of declining prices it would post higher losses this quarter than losses of NT$92.98 million (US$2.93 million) last quarter.
“Plummeting oil prices led to a widespread decline in prices for all petrochemical products. However [selling] prices of our product fell deeper than our material costs, as demand in China shrank,” company chairman Lin Wen-yuan (林文淵) told reporters.
Lin said lower demand resulted from the Chinese government’s efforts to curb luxury spending and cool the housing market.
He said that oversupply would improve in China probably in March or April next year if Beijing proposes new measures to stimulate its economy, Lin said.
“The global petrochemical industry is largely affected by policy changes in China, and the nation is also the largest market for most Taiwanese companies in the industry,” Lin said.
Due to declining oil prices, the company also booked losses resulted from declining inventory prices this quarter, Lin added.
This quarter would be the second consecutive quarter for the company to register a loss, Lin said.
From January through last month, Taiwan Styrene Monomer reported profit of NT$231.85 million, or NT$0.47 per share, down 70.67 percent from NT$790.39 million, or NT$1.5 per share, the previous year, because demand in China was better last year, Lin said.
Lin said oil prices next year would not be lower than the US$50 to US$60 per barrel seen toward the end of this year.
Lin said costs for oil companies in Russia are higher than US$60 per barrel as oil sources in Russia are far from harbors, and although oil companies in Saudi Arabia are still profitable with current prices because of lower manufacturing costs, companies in other nations are not.
Lin estimated that the low oil prices might not last for a year.
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