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Taiwan's Chemical Industry: Looking Back and Looking Ahead

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Taiwan's Chemical Industry: Looking Back and Looking Ahead Global Outlook Taiwan’s Chemical Industry: Looking Back and Looking Ahead Yu-Chen Hu Since World War II, Taiwan’s chemical industry National Tsing Hua Univ. Taiwan Institute of Chemical Engineers and economy have escalated dramatically. Self-sufficient in many areas, today Taiwan still Shien-Chang Chen Darien Chemical Corp. faces the challenges imposed by government Taiwan Institute of Chemical Engineers technical initiatives, international trade policies and regulations, and competition from China and other emerging economies. aiwan’s chemical industry originated in the 19th cen- stream processing drives the development of upstream tury, after the Qing Dynasty ceded Taiwan to Japan. petrochemical industries. In 2010, approximately 80 major TIn the era of Japanese occupation, which lasted from chemical companies and the 42 member companies of the 1895 until 1945, Taiwan served as a base for the export of Taiwan Petrochemical Association produced the upstream, agricultural and industrial materials to Japan. After World midstream, and downstream products of the petrochemical War II, the Republic of China became the governing body industry. (Many of the key companies and their products of Taiwan and initiated an era of rapid industrialization. In are listed in Table 1.) Taiwan’s production capacity for line with this rapid economic growth, Taiwan’s chemical ethylene now exceeds 4 million m.t./yr, making Taiwan the industries expanded and thrived in the ensuing decades. eighth largest ethylene producer in the world (1). Overall, By 1991, the gross domestic product (GDP) of Taiwan’s Taiwan exports 50% of its petrochemical products, with chemical industries totaled approximately $37 billion* and about 70% of its plastic, synthetic resin, and synthetic accounted for a quarter of Taiwan’s total manufacturing rubber raw materials (e.g., polyethylene, styrene butadiene industry. In particular, $24.2 billion was attributable to a rubber) going to China. growing market for consumer goods and basic chemical This article charts Taiwan’s progress as a chemical products. In 2010, the total revenue from Taiwan’s chemi- industry leader over the past century. It details the rapid cal industries reached $135 billion, accounting for 29.3% of growth in key industry sectors since World War II, and Taiwan’s overall GDP in the manufacturing sector (approxi- addresses some of the challenges the nation’s industries mately $461 billion). face today. One noteworthy feature of Taiwan’s chemical industry is its backward integration — growing demand from down- The foundations of an industry (1895–1945) During the Qing era of the 19th century, Taiwan had * All monetary quantities are in U.S. dollars; when this article was written, small-scale plants for such industries as brewing, paper- the exchange rate was 1 U.S. dollar = 30 New Taiwan dollars. making, dyeing, and grease processing. These sectors Copyright © 2012 American Institute of Chemical Engineers (AIChE) CEP April 2012 www.aiche.org/cep 41 Global Outlook Table 1. Major petrochemical producers and their products. remained important after Japan took over Taiwan in 1895. China Petroleum Corp. (CPC) Increasing demand and production capacity entailed the use of more machinery, thereby modernizing Taiwan’s Aromatics: benzene, toluene, p-xylene chemical industry. Taiwan’s abundance of agricultural China Petrochemical Development Co. raw materials spurred Japan’s government and enterprises Monomers: caprolactam; acrylonitrile to invest significant capital to build plants and develop Industrial Chemicals: acetic acid technologies in Taiwan, and most of the resulting products China Man-Made Fiber Corp. (CMFC) were exported to Japan. Monomers: ethylene glycol; ethylene oxide One important raw material was sugarcane, whose Chang Chun Plastics Co. (CCP) ample supply laid the foundation for several industries. Molasses, the byproduct of sugar production, was exploited Monomers: acrylamide Plastics: polyvinyl alcohol; epoxy resin for fermentation, stimulating the brewing industry. Molas- Solvents: acetone ses was also employed in the production of ethanol, which Industrial Chemicals: acetic acid; phenol; biphenyl A (BPA) was used in industry and tested as an alternative fuel. Chi Mei Yet another byproduct of sugar production, bagasse, was recycled for papermaking. This burgeoning agricultural sec- Synthetic Rubber: styrene-butadiene rubber; thermoplastic elastomer tor led to the establishment of a chemical fertilizer industry, Plastics: polystyrene; acrylonitrile butadiene styrene (ABS); albeit at a small scale. polymethylmethacrylate; polycarbonate Taiwan’s oil refining industry was also launched Darien Chemical Corp. during this period, when in 1937 the Japanese government Monomers: vinyl acetate monomer; 1, 4-butanediol; constructed a refinery in the southwestern port city of polytetramethylene ether glycol Kaohsiung to provide fuel for the Japanese Navy. Solvents: ethyl acetate Industrial Chemicals: ethylene vinyl acetate (EVA) emulsion Revival to rapid growth (1945–1990) powder; 2-methyl-1,3-propanediol; allyl alcohol The majority of Taiwan’s industrial equipment was Formosa Chemical and Fiber Corp. devastated during World War II, after which all industrial Aromatics: benzene, toluene, p-xylene infrastructure was transferred by Japan to the Taiwan gov- Monomers: purified terephthalic acid; styrene monomer ernment. From 1945 to 1950, Taiwan’s remaining indus- Plastics: ABS; polypropylene; polycarbonate tries survived by making practical use of locally available Solvents: acetone resources, such as wood and sugar. This period of basic- Industrial Chemicals: phenol resource exploitation was the first step in Taiwan’s postwar Formosa Plastics Corp. (FPC) industrial re-emergence and progress (Figure 1). Monomers: vinyl chloride monomer, acrylonitrile; acrylic acid; Despite a shortage of equipment and technology, methyl methacrylate Taiwan’s government managed to build plants to produce Plastics: polyethylene (low density, high density); EVA; polyvinyl chloride (PVC); polypropylene; polyacetals alkali (NaOH) and acid (H2SO4) for agricultural fertilizers. The state-run China Petroleum Corp. (CPC) was founded Grand Pacific Petrochemical Corp. in 1946, and began producing fuels and petrochemicals in Monomers: styrene monomer 1947 when it took over the Japanese Navy fuel refinery at Plastics: ABS Kaohsiung, with its capacity of 6,000 bbl/d. In the years LCY Chemical Corp. that followed, CPC built more plants, upgraded equip- Monomers: acetaldehyde ment, and upgraded refinery processes to meet downstream Synthetic Rubber: thermoplastic elastomer demand — increasing its refinery capacity to nearly Plastics: polypropylene 60,000 bbl/d by the late 1960s. Solvents: acetone; ethyl acetate; isopropyl alcohol; methyl ethyl ketone Another impetus to Taiwan’s emerging chemical indus- try was the production of bakelite at Chang Chun Plastics Nanya Co. (CCP), beginning in 1949. Monomers: ethylene glycol; 1, 4-butanediol In the early 1950s, Taiwan’s government initiated a Plastics: epoxy resin Industrial Chemicals: BPA series of economic development plans, assisted by some $100 million per year in U.S. aid from 1951 to 1965 to Taiwan Prosperity Chemical Corp. build industrial parks and strengthen electricity supply and Solvents: acetone transportation infrastructures. These investments bolstered Industrial Chemicals: BPA Taiwan’s inorganic acid- and fertilizer-based light indus- 42 www.aiche.org/cep April 2012 CEP Copyright © 2012 American Institute of Chemical Engineers (AIChE) 1945–1950 1951–1960 1961–1970 1971–1980 1981–1990 1991–2000 2001–2010 Basic Industry Light Industry Petrochemical Petrochemical Domestic Fine Chemical Self-sufficiency; Using Local and Processing Industry Grows; Industry and Raw Materials and Semiconductor High-Tech Resources Industries Free Trade; Heavy Industry Replace Imports; Industries Grow; Industries $18,000 Develop Raw Materials Grow Labor-intensive Labor-intensive Advance Imported to Industries Move Industries Move Process for Export to Southeast Asia to China $16,000 Agricultural Food Processing Processing Petrochemical Information Petrochemical Products Canned Goods Flour, Vegetable Oil; Industry Technology (IT) Industry Fruit, Tea, Textiles and Ethane Cracker Industry New Naphtha $14,000 Rice, Sugar Garments (1973); New Computer and Crackers Wood Industry Naphtha Crackers Peripherals (1993,1998) Plywood, (1975, 1978) Assembly Wood Products Furniture, Natural Gas $12,000 Timber, Pulp; Wood-pulp- Urea, Ammonia, Paper based Rayon Methanol Steel and Petrochemical Petrochemical Heavy Industry Industry Industry Steel Milling; New Naphtha New Naphtha $10,000 Mining Ore Processing Petrochemical Ship Building Cracker (1984); Cracker (2007) Coal, Copper, Nitrogen- Industry and Salvaging Growing Environmental Aluminum; Phosphorus- 1st Naphtha Advanced and Protection Cement Potasium Fertilizer; Cracker (1968) Specialty $8,000 Concerns Carbide-based Manufacturing Chemicals PVC; Ammonia, Electric Semiconductor Fine, Nano, Bio Urea from Coal Gas Appliances; Fertilizer Industry Shoes Per Capita National Income, U.S. $/yr Per $6,000 Acid, Alkali Motherboard, Advanced IT Chemicals Wafer, and Integrated Circuit Thin-Film Transitor/ Oil Refining Formaldehyde, Liquid Crystal Synthetic Resin Design, $4,000 Manufacture and Display Monitors; Packaging; Flatscreen TVs; Electronic Light-emitting Chemicals Diode Technology; $2,000 and Precision Wireless Local Machinery Area Network Technology $0 1940 1950 1960 1970
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