Formosa Plastics cuts Mailiao PP ops on squeezed margins

02 June 2010 11:06  [Source: ICIS news]

SINGAPORE (ICIS news)--Taiwan's Formosa Plastics Corp (FPC) will run its polypropylene (PP) facilities in Mailiao, Taiwan, at a reduced rate of 80% in June due to squeezed margins, a company source said on Wednesday.

"The facilities had run at 85% in April and May, but the operating rate will be reduced further as low PP prices and high feedstock costs were squeezing our margins,” the source said.

The facilities consist of two plants with a combined capacity of 350,000 tonnes/year.

The producer was feeling increasing cost pressure due to a narrowing gap between the spot prices of PP and propylene feedstock in Asia, he said.

The benchmark PP injection and yarn grade typically had to be $150/tonne (€123/tonne) above propylene feedstock value in order for PP plants to be viable, he added.

The benchmark PP injection and yarn grades were selling at $1,220-1,260/tonne CFR (cost and freight) China, and propylene feedstock was assessed at $1,010-1,110/tonne CFR northeast Asia for the week ended 28 May, according to ICIS pricing.

Taiwan’s other major PP producers are Formosa Chemicals & Fibers Corp (FCC) and Lee Chang Yung.

($1 = €0.82)

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By: Chow Bee Lin
+65 6780 4359



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