[vc_row][vc_column][vc_single_image image=”54872″ img_size=”large”][vc_column_text]
The global petrochemical industry is facing severe overcapacity across various bulk chemicals. Most forecasts predict that this oversupply will continue to worsen for several years, forcing producers to scale back output. In regions where energy and feedstock costs lack comparative advantages, it may even lead to the closure of uncompetitive production lines. In Europe and Northeast Asia (excluding China), a wave of plant shutdowns under the banner of “capacity rationalization” has already emerged.
In contrast, Taiwan is moving in the opposite direction. In May 2024, the Executive Yuan approved CPC Corporation’s Fourth Naphtha Cracker Renewal Project, with a budget of NT$100 billion, which will significantly expand CPC’s ethylene and propylene production capacity. In the midst of this global trend toward capacity rationalization, is the new Fourth Naphtha Cracker truly a sound project in terms of industrial strategy and economic viability?
The Environmental Rights Foundation has compiled the latest domestic and international information and data to produce the policy report “Can the New Fourth Naphtha Cracker Still Be Built? – Global and Taiwan Petrochemical and Plastic Feedstock Overcapacity and the Global Trend of Petrochemical Capacity Rationalization.”
Key findings of the report are as follows:
- Global Petrochemical Overcapacity Is Severe and Worsening
Global capacity for six major base chemicals reached a record high of over 220 million tons between 2023 and 2024. Oversupply is expected to persist through 2030. According to ICIS, global production capacity currently exceeds demand by 25–30%, well above the balanced range of 10–15%. This puts pressure on producers to reduce production, and some high-cost regions may even face plant closures. - Commodity Plastics Are Also Facing Overcapacity
Although demand for plastic feedstocks continues to grow, it lags far behind the pace of capacity expansion. Since 2023, global demand-to-capacity ratios for ABS, PVC, PP and other products have generally fallen below 80%, with ABS dropping below 60%. All five major plastics face significant overcapacity risks. - Taiwan’s Domestic Utilization Rates Are Also Low
According to Taiwan’s industrial yearbooks, from 2022 to 2026, most petrochemical feedstocks and plastic products—except PVC—have domestic utilization rates below 70–80%. Taiwan is clearly also experiencing serious overcapacity issues. - Taiwanese Petrochemical Companies Are Expanding Abroad, Causing an “Outflow Trend”
Much of Taiwan’s petrochemical production has moved overseas, especially to China and the U.S. In several cases, overseas capacities for plastic feedstocks have already surpassed domestic levels. This has increased supply in foreign markets while depressing domestic utilization rates, creating a new industrial landscape marked by domestic contraction and overseas expansion. - A Global Wave of “Capacity Rationalization” Has Begun
ICIS forecasts a first wave of permanent plant closures from 2024 to 2026, continuing through 2030. Old and high-cost facilities in Europe and Northeast Asia (excluding China) are the primary targets. Real-world closures have already occurred, involving ExxonMobil, INDORAMA, and Lotte Chemical, with the South Korean government promoting restructuring policies for its petrochemical sector. - Taiwan’s Expansion Plans Run Counter to Global Trends and Should Be Reconsidered
In 2024, the Taiwanese government approved the “New Fourth Naphtha Cracker” project, which will significantly increase ethylene and propylene capacity. This move contradicts the global trend toward capacity rationalization and may exacerbate Taiwan’s overcapacity problem. A planned “New Materials Circular Industrial Park” in Kaohsiung could further expand petrochemical capacity. Economic and environmental risks must be carefully evaluated. - Overseas Expansions Also Face Risks
Formosa Plastics Group’s Sunshine Project in Louisiana has faced strong public opposition and litigation, and has been criticized as a case of environmental racism. A report by IEEFA notes dim prospects for the polyethylene sector and recommends that Formosa abandon the project. - Capacity Rationalization Should Be Considered a Policy Option
Research by ERF and TPEC suggests that reducing petrochemical exports may be a low-cost decarbonization strategy. Given global structural adjustments, domestic overcapacity, and carbon neutrality goals, Taiwan should incorporate petrochemical capacity rationalization into policy discussions and promote green transition and industrial diversification.
[/vc_column_text][/vc_column][vc_column][vc_btn title=”Full Report” link=”url:https%3A%2F%2Fdrive.google.com%2Ffile%2Fd%2F1hErTVCnBheOwpcQzwmOCE6WyFX30XSqm%2Fview%3Fusp%3Dsharing|||”][/vc_column][/vc_row]