Formosa Group's Four Key Firms Report July Revenue and Q3 Outlook: NYPC and FCFC Optimistic, FPCC Expects Oil Prices to Trade Sideways

Formosa Plastics Corporation (1301-TW) and its three core affiliates released their July revenue and business outlook today (7th). Nan Ya Plastics Corporation (1303-TW) expects its third-quarter and second-half operations to improve further, driven by robust demand for electronic materials and investment income from its affiliate, Nanya Technology (2408-TW). Far Eastern Chemical Corporation (1326-TW) remains optimistic about Q3 performance as downstream customers prepare inventory ahead of the September peak season. In contrast, Formosa Plastics warns that recurring Middle East conflicts have intensified crude oil volatility and made customers more cautious, leading to projected Q3 revenues below Q2 levels.

Formosa Plastics notes that although the U.S. and Iran signed a memorandum in mid-June, hostilities resurfaced in July. Pakistan’s attempt to restart negotiations at the end of July proved short-lived, causing oil prices to rise amid ongoing volatility. If geopolitical tensions in the Middle East persist, global energy and petrochemical supply chains could face renewed disruptions.

While nine naphtha crackers across Asia are scheduled for maintenance during Q3 and the Christmas decoration product season boosts demand—both favorable for sales—the fluctuating U.S.-Iran conflict continues to affect customer procurement behavior. As a result, Formosa Plastics estimates Q3 revenue will fall below Q2 levels. However, the company expects to recognize NT$1.1 billion in cash dividends and approximately NT$1.3 billion from a U.S. subsidiary share swap, which should support overall profitability.

NYPC highlights that AI-driven innovation has significantly increased demand for substrate materials. Combined with shortages of mid-to-high-end raw materials and sustained high copper prices, products such as copper-clad laminates, fiberglass yarn/fabric, copper foil, and substrates have gained strong sales momentum. With electronic materials in high demand, core business growth is expected.

NYPC emphasizes that its investee company, Nanya Technology, has delivered outstanding performance in the AI memory segment. Supported by these dual growth engines, Q3 performance is expected to surpass Q2, with even stronger results anticipated in the second half.

FCFC anticipates increased restocking demand from downstream customers as the September peak season approaches. Coupled with recognized equity-method investment income, the company maintains an optimistic outlook for Q3 operations. Additionally, FCFC notes that Taiwan Styrene Corporation (1310-TW) recently announced the permanent shutdown of its SM plant starting October. FCFC has already engaged in discussions with Taiwan Styrene and domestic downstream clients to fill the market supply gap. This not only reduces downstream industries’ reliance on imports but also increases Taiwan Styrene’s styrene operating rate, creating a win-win scenario to jointly address competition.

Regarding oil price trends, Formosa Petrochemical Corporation (6505-TW) observes that in August, following the U.S. announcement of resumed negotiations, intensive talks on the Strait of Hormuz navigation mechanism and ceasefire agreement restart led to a significant reduction in geopolitical risk premiums. This caused oil prices to drop sharply in early August. Markets continue to await the outcome of temporary U.S.-Iran agreements, and oil prices are expected to trade within a range for the foreseeable future.