The production value of Taiwan's petrochemical sector for the first quarter of this year fell about 8 percent from a year earlier as a result of falling product prices on weaker global demand, according to a government report released yesterday.

The Industry and Technology Intelligence Services (ITIS), a research institute under the Ministry of Economic Affairs, said the global petrochemical market staged an initial rebound earlier in the quarter, but the market later soured in the face of depressed product prices.

In March, international crude oil prices fell to US$109 per barrel from US$116 recorded in February, while ethylene prices in March dropped 5.5 percent from a month earlier to US$1,359 per metric ton, the ITIS said.

Even worse, butadiene prices in March fell more than 28 percent from February to US$1,474 per metric ton amid unfavorable market conditions, the ITIS said.

These factors caused the output of the local petrochemical sector for the first quarter to fall 8.1 percent to NT$457.8 billion (US$15.28 billion) from NT$498.31 billion recorded in the same period of last year, the report said.

The first-quarter figure, however, showed a rise of 3.5 percent from the NT$442.36 billion registered in the fourth quarter of last year, the report added.

Fan Chen-cheng, an analyst with the Industrial Economics and Knowledge Center (IEK) of the government-sponsored Industrial Technology Research Institute, said he expects the doldrums in the global petrochemical industry to continue into the second quarter.

The IEK was commissioned by the ITIS to produce the report.

Fan said that in the second quarter, the production value of the local petrochemical business is expected to rise only 1.2 percent from the first quarter to NT$463.5 billion.

However, he went on, as the global economy is expected to make a comeback, business could pick up in the second half of this year.

In addition, as CPC Corp., Taiwan will add new production capacity to its naphtha cracking facilities in the second half of the year, output of the local petrochemical industry could be boosted, the analyst said.

According to the ITIS report, the production value of the sector for 2013 is expected to rise 3.1 percent from 2012 to NT$1.87 trillion.