UpdateTaiwan's Formosa restart plans may get delayed by fire

27 July 2011 07:13  [Source: ICIS news]

By Nurluqman Suratman

FomosaSINGAPORE (ICIS)--Taiwan’s Formosa group may face further delays in restarting several of its plants at its Mailiao complex following a fire at the site late on 26 July, sources said on Wednesday.

The fire, the fifth such incident at the complex this year, broke out at a section of a hydrogen pipeline in the vicinity, sources said.

“There was a small fire, but it did not damage any plants,” a spokesperson from Formosa Petrochemical Corp (FPCC) said, adding that the firm’s 1.03m tonne/year No 2 and 1.2m tonne/year No 3 crackers at the complex are running at full capacity.

However, Formosa Plastics Corp (FPC) had to shut its polyethylene (PE) and ethylene vinyl acetate (EVA) units at the complex as a cautionary measure, an FPC source said.

“Plant operators are very careful nowadays because there’ve been so many fires over the past months,” the FPC source said.

The affected facilities comprise a 264,000 tonne/year linear low density PE (LLDPE) plant, a 350,000 tonne/year high density PE (HDPE) unit and a 240,000 tonne/year low density PE (LDPE)/EVA swing plant, the source added.

“We have no idea how long the plant will remain shut because the situation is unclear,” the source said.

China-based traders said there may be some impact on the EVA market if the outage at FPC’s EVA plant is prolonged beyond a week.

“A week-long outage should not have any impact on the market because demand for EVA from the downstream footwear and hot melt adhesives industries lacks force,” the source said.

Among other units at the complex, production at Formosa BP Chemicals Corp’s (FBPC) 300,000 tonne/year acetic acid plant at Mailiao was unaffected by the fire and is operating at full capacity, a company official said.

Formosa BP Chemicals (FBPC) is an equally owned joint venture between BP and Formosa Chemicals and Fibre Corporation.

Nan Ya Plastics’ four monotheylene glycol (MEG) units in Mailiao, which have a combined capacity of 1.8m tonnes/year, are also running "normally" at 85-90% following the fire, sources said.

“There has been no impact at all on our factories [from the fire], but we still need to check with FPCC if their plants will be running normally,” said David Tsou, a spokesperson at the investor relations department of Nan Ya Plastics.

FPC's ethylene dichloride (EDC), vinyl chloride monomer (VCM), polyvinyl chloride (PVC) and caustic soda plants are also unaffected by the fire and the company has no plans to shut any of the units, according to a company source.

The company’s 98,000 tonne/year methyl methacrylate (MMA) acetone cyanohydrin-based unit in Mailiao is also running at full tilt, a company source said.

FPC shut its 100,000 tonne/year ECH unit at the site immediately after the fire, but has scheduled to restart it on 27 July, according to a company source.

A pipeline fire at the complex on 12 May had forced FPCC to shut its 700,000 tonne/year No 1 cracker and downstream 109,000 tonne/year butadiene (BD) extraction unit for inspection, while the local government in Yunlin county ordered Nan Ya Plastics to shut five units at its nearby Haifung factory for safety review.

While Nan Ya Plastics has gained approval to restart its 360,000 tonne/year No 3 and 720,000 tonne/year No 4 MEG plants at Haifung, three other units remain shut pending approval from the local government, according to Tsou.

Formosa Chemicals & Fibre Corp (FCFC) was also ordered to shut its No 1 aromatics unit, which can produce 150,000 tonnes/year of benzene, 100,000 tonnes/year of isomer-grade mixed xylenes and 270,000 tonnes/year of paraxylene (PX), following the blaze on 12 May.

Earlier this week, Yunlin county officials were expected to give FCFC permission to restart the No 1 unit soon, but 26 July fire may potentially delay the approval process, sources said.

The company’s No 2 and No 3 aromatics unit at the site are unaffected by the 26 July fire.

FPCC was also originally scheduled to restart its No 1 cracker in Mailiao this week, but the incident may potentially derail the company’s restart plans, sources said.

FPCC had earlier said it planned to restart the No 1 cracker before the turnaround at its No 3 cracker to prevent feedstock shortage for its derivative facilities.

The No 3 cracker is scheduled to be shut for a 40-45 day turnaround in the middle of August, but it is not clear if this will be postponed, sources said.

Traders and end-users said it is still too early to say whether there will be any impact on BD pricing because details on the impact of the fire is still unclear.

“Maybe Formosa may delay or cancel some BD cargoes and BD prices may go up, but it is too early to say,” a Japanese trader said.

“Even if Formosa were to cancel or delay their BD shipments, there is a lot of supply from China and we don’t see any serious shortage or impact on the BD market,” an end-user said.

Asia BD prices fell to $4,100-4,150/tonne (€2,829-2,864/tonne) CFR (cost & freight) NE (northeast) Asia on 22 July, down by $150/tonne from an all-time high of $4,250-4,300/tonne CFR NE Asia on 15 July.

Additional reporting by Peh Soo Hwee, Chow Bee Lin, Feliana Widjaja, Loh Bohan, Mahua Chakravarty, Helen Lee, Helen Yan, Gabriel Yip, Judith Wang and Junie Lin

($1 = €0.69)

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By: Nurluqman Suratman



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