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Formosa Plastics Hits Limit Up as Petrochemical Stocks Surge to Multi-Year Highs
Process Industries · Chemicals: Major Diversified · economic_daily · 2026-10-07
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Formosa Plastics shares surged to the daily limit while Formosa Petrochemical reached a five-year high, driven by rising oil prices and improved refining margins.
What Happened
Market Performance: Shares of the Formosa Plastics group saw significant gains, with Formosa Plastics hitting the daily limit of 75.4 TWD, a two-year high, and Formosa Petrochemical reaching 110 TWD, a five-year peak. Institutional investors, including foreign funds and local investment trusts, have been aggressively accumulating these stocks, signaling strong market confidence in the sector.
Oil Prices and Refining Margins: The U.S. Energy Information Administration (EIA) has sharply raised its oil price forecasts, citing tightening global inventories and persistent diesel supply shortages. Despite high production levels, geopolitical disruptions in the Middle East and Russia have supported refining margins, with lower official selling prices from Saudi Arabia further benefiting Formosa Petrochemical's cost structure.
Supply and Demand Dynamics: The industry is entering the traditional fourth-quarter peak season, which has led to a recovery in demand for resins such as PE, PP, and PVC. Furthermore, scheduled maintenance at Chinese refineries is expected to reduce supply by 8% to 10%, strengthening the pricing power of manufacturers and boosting expectations for third-quarter earnings.
Industry Outlook and Risks: Despite the seasonal uptick, industry participants remain cautious regarding the broader economic environment. Persistent global inflation and a slowdown in China's real estate sector continue to weigh on demand for products like PVC, suggesting that the traditional peak season may still face significant headwinds through the end of the year.