TAIPEI -- Taiwan's largest industrial conglomerate Formosa Plastics Group on Monday said it expects oil prices to rebound in the second half of 2017 after falling global crude hit its April-June net profit.
"Global crude oil price is likely to rebound in the second half of 2017 as the overall economy now looks more optimistic in the U.S., Europe, and in China as well," said Tsao Mihn, president of Formosa Petrochemical, FPG's petrochemical arm.
He added: "The concern would be whether U.S. and Europe would continue to tighten hot money that could drive oil price and whether OPEC countries could cut output more efficiently."
Lin Keh-yen, executive vice president of Formosa Petrochemical said it was likely that oil prices would break out of the $45-$50 range it had been trading in. He saw average oil prices inching to around $50 in the second half of 2017.
But the industrial group has tempered expectations for higher prices. In April, it said it saw average crude oil prices rising to $55 this year.
Brent crude futures slipped some 1% to $46.24 on Monday, but had regained some ground from its six-month trough of $44.82 end-June.
FPG's four crown jewels -- publicly traded companies Formosa Plastics, Formosa Petrochemical, Formosa Chemicals and Fibre and Nan Ya Plastics -- together generated net income of 39.21 billion New Taiwan dollars ($1.28 billion) in the April-June period, down nearly 29% from the previous quarter, and down 32% from a year ago, mainly due to sliding oil prices. Their revenue rose 3.6% to NT$347.5 billion from a year ago, but still declined 7.1% from the previous quarter.
"We do think the overall demand for petrochemical industry has bottomed out in the April-June period and the current quarter looks brighter," said Leo Li, an analyst at Yuanta Investment Consulting. But he added that his company did not see oil rising higher than $50.
The group's four main units had a combined market capitalization of more than NT$2.68 trillion when trading closed on Monday, before the earnings were released.