UpdateFormosa shuts Mailiao cracker, downstream units after fire

13 May 2011 05:26  [Source: ICIS news]

(adds shutdown of BD unit, implications on ethylene market)

By Peh Soo Hwee and Pearl Bantillo

SINGAPORE (ICIS)--The Formosa group shut its 700,000 tonne/year No 1 naphtha cracker, along with some other downstream units, in Mailiao after a fire hit a plant at the petrochemical complex in northwestern Taiwan late on Thursday, sources from the group said on Friday.

“The utilities pipeline leaked and that caused a fire. But the fire has ceased [Friday morning] and the leaking has stopped,” said a source at Formosa Petrochemical Corp (FPCC), which operates the cracker.

The fire caused a power outage that shut the No 1 cracker, said a second source from the company.

Market sources downplayed any immediate impact from the shutdown at Formosa’s No 1 cracker on ethylene spot prices since most derivative units were also shut.

Formosa’s two other naphtha crackers in Mailiao – a 1.03m tonne/year No 2 unit and a 1.2m tonne/year No 3 unit – are running normally, said a source from FPCC, but he declined to comment on the plants’ operating rates.

“There is no impact as of now as the [ethylene] market was actually softening before this,” said an olefins trader.

Ethylene spot prices in northeast Asia fell down from 15-month highs during the week because of weak appetite for spot cargoes.

Buying sentiment remained bearish as strong monomer prices had taken a toll on key derivatives, such as the polyethylene (PE) sector. Ethylene prices slipped $10/tonne to $1,340-1,370/tonne (€938-959/tonne) CFR (cost & freight) NE (northeast) Asia on 12 May, according to data from ICIS pricing.

Formosa’s 109,000 tonne/year butadiene (BD) unit in Mailiao was also taken off line on Thursday, said a source from Formosa Plastics Corp (FPC).

“I am not sure how long it will be down, but it is a serious matter and it is possible it may be down for at least one week,” the FPC source said.

Formosa Chemicals and Fibres Corp (FCFC) shut its No 1 aromatics unit in Mailiao for safety reasons following the fire, a company source said.

The unit can produce 270,000 tonnes of paraxylene (PX), 150,000 tonnes/year of benzene and about 100,000 tonnes/year of isomer xylene.

“There was no damage to the facility but we shut the unit down for safety reasons,” said the FCFC source.

Meanwhile, Nanya Plastics, a part of the Formosa group, also halted operations at two of its four monoethylene glycol (MEG) units with a combined capacity of 700,000 tonnes/year at the site following the fire, said a company source.

The two other MEG plants - a 400,000 tonne/year No 2 unit and a 700,000 tonne/year No 4 unit - are continuing to run, the source said.

A 240,000 tonne/year ethylene vinyl acetate copolymer (EVA)/low density PE (LDPE) plant in Mailiao, operated by FPC, was also taken off line, said a second FPC source.

“All the derivative plants are shut for safety considerations,” the second FPC source said.

Some other plants were heard to have been shut. They include two styrene monomer (SM) plants with a 250,000 tonne/year and a 350,000 tonne/year capacity respectively, but these shutdowns could not be confirmed.

Formosa will need to get clearance from the local authorities in Yunlin county to restart the facilities.

“We could not provide the restarting details until obtaining the approval from the local admistration,” said another source from Formosa.

“The only problem is whether government authorities will let the cracker restart soon,” the olefin trader said.

Formosa has had records of fire incidents at Mailiao. In March, a small fire broke out at the No 2 naphtha cracker, but this was put out quickly and the unit was not shut.

But in July last year, its 700,000 tonne/year No 1 cracker at the site was shut for nearly four months following a fire.

($1 = €0.70)

Additional reporting by Bohan Loh, Becky Zhang, Felicia Loo, Helen Lee, Helen Yan, Feliana Widjaja and Belle Huo

Read John Richardson and Malini Hariharan’s blog – Asian Chemical Connections

By: Peh Soo Hwee
+65 6780 4359

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