Formosa Petchem to save costs by cracking LPG

17 May 2006 09:01  [Source: ICIS news]

SINGAPORE (ICIS news)--Formosa Petrochemical Corp (FPCC), the Taiwanese refining and chemicals major, could cut costs at its No 3 cracker project by using liquefied petroleum gas (LPG) as feedstock, a company source said on Wednesday.

 

The 1.2m tonne/year cracker project at Mailiao would be able to crack up to 30% LPG feedstock, he added.

 

LPG costs slightly more than $500/tonne, and is a cheaper alternative to naphtha which has seen its prices shoot up due to high crude oil prices, he said. However, he could not say how much savings using LPG would bring.

 

Naphtha prices were still above $600/tonne even though open spec cargoes for first-half July delivery fell $21/tonne to $613-614/tonne CFR Japan this week on weaker crude, according to ICIS pricing, the global chemical market intelligence service.

 

“(Our) refinery can supply close to 50% of our naphtha. (But we) still need to buy,” the source said. FPCC is not using gas oil as feedstock as it was still expensive, he added.

 

The start-up of the No 3 cracker would help alleviate a 600,000 tonne/year ethylene shortage at the Formosa Plastics Group, which FPCC belongs to.

 

FPCC would have a total ethylene capacity of close to 3m tonne/year after the project starts up in the first quarter of 2007. The company’s No 1 and No 2 crackers have nameplate capacities of 700,000 tonne/year and 1.03m tonne/year respectively.

 

“We’re unable to import so much (ethylene) because spot prices are too high. PE production is not competitive. Only ethylene glycol (EG) can still accept (the high feedstock costs),” the source said. The company bought 255,000 tonne/year of ethylene last year, up from 239,000 tonne/year in 2004.

 

Ethylene from the No 3 cracker would feed a 600,000 tonne/year styrene monomer (SM) project at Formosa Chemicals and Fibre Corp and Nan Ya’s 720,000 tonne/year monoethylene glycol (MEG) project. FPCC will not have any ethylene surplus if all its downstream plants are operating at full rates, the official said.

 

FPCC is also building two 80,000 cubic metre cryogenic tanks at Mailiao to store ethylene from the new cracker.

 

The company also has a propylene deficit but that will be relieved by the start-up of its deep catalytic cracking (DCC) unit, metathesis unit and the cracker in early 2007, the source said without giving the deficit amount.

 

Propylene capacity at the refinery will be raised to 750,000 tonne/year from 460,000 tonne/year. The proposed metathesis unit will produce 250,000 tonne/year of propylene while the new cracker has a propylene output of 600,000 tonne/year. The company's total propylene capacity will reach 2.5m tonne/year in early 2007.

 

FPCC will provide propylene to Formosa Plastics Corp’s 450,000 tonne/year polypropylene (PP) unit at Ningbo, Jiangsu Province, and its butanol, acrylic acid and esters projects in China and Taiwan. The company could have excess propylene for sale on the spot market depending on operations at its downstream units, he said.

By: Florence Tan
+65 6780 4359

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