Taiwan’s FPC cuts May PP production to 75% on squeezed margins

12 May 2011 13:37  [Source: ICIS news]

SINGAPORE (ICIS)--Formosa Plastics Corp (FPC) is operating its polypropylene (PP) facility at Linyuan in Taiwan at 75% capacity in May, down 25% from its usual operating rates because of squeezed margins, a company source said on Thursday.

FPC’s margins have been squeezed by the recent sharp hikes in propylene feedstock prices, the source said.

"We won’t be able to cover our costs at the current propylene prices, even if we sold PP at $1,720/tonne (€1,204/tonne) FOB (free on board) Taiwan,” the source said.

The source declined to reveal its propylene feedstock cost for May but he said naphtha-based producers in Asia typically need a propylene-PP spread of at least $120/tonne to justify PP production.

FPC’s PP facility at Linyuan comprises a 230,000 tonne/year line and a 120,000 tonne/year plant, according to ICIS.

The producer had run its PP plants at 80% capacity in April, down from its normal operating rate of 100% due to thin margins, he said.

($1 = €0.70)

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By: Chow Bee Lin
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