UpdateTaiwan's Formosa shuts No 3 Mailiao cracker on poor demand

31 May 2012 09:39  [Source: ICIS news]

(adds details throughout, impact on naphtha market)

By Ong Sheau Ling and Nurluqman Suratman

SINGAPORE (ICIS)--Taiwan's Formosa Petrochemical Corp (FPCC) shut its No 3 naphtha cracker in Mailiao on Thursday because of poor demand and scheduled maintenance at some of its downstream units, company spokesman Lin Keh-Yen said.

The No 3 unit has a nameplate ethylene capacity of 1.2m tonnes/year and the largest of the three crackers at the site.

“The plant was shut because of poor downstream demand and because of the some maintenance shutdowns of downstream plants,” Lin said without elaborating.

Lin said that FPCC has yet to fix a restart date for the unit, but traders said they expect the No 3 unit to be shut for about two weeks.

A company source who declined to be identified said that the shutdown will be around 14 days since technical repairs will also be conducted at the plant.

Meanwhile, Formosa’s two other naphtha crackers in Mailiao – a 700,000 tonne/year No 1 unit and a 1.03m tonne/year No 2 unit – are currently running at 80% of capacity, a second company source said.

“We are planning to bring the other two crackers’ capacity to around 90%,” FPCC spokesperson Lin said.

Prior to the shutdown of the No 3 cracker, FPCC was running its three Mailiao crackers at a reduced rate of 80% since mid-May because of poor margins.

The unplanned shutdown of the cracker may exacerbate the existing long supply of naphtha in Asia that is weighing on prices, traders said.

At midday, open-spec naphtha prices were at $820.50-838.50/tonne (€664.61-679.19/tonne) CFR (cost and freight) Japan.
FPCC will skip spot naphtha purchases for loadings in the second half of July, a source close to the company said.

The No 3 cracker’s shutdown, however, is expected to have minimal impact on Nan Ya Plastics’ monoethylene glycol (MEG) facilities at the site that derive ethylene feedstock from the cracker, a Nan Ya source said.

Nan Ya Plastics, a sister company of FPCC, has four MEG plants in Mailiao, with the biggest of the four, with a 700,000 tonne/year capacity due to shut in June for about 30 days of maintenance.

($1 = €0.81)

Additional reporting by Peh Soo Hwee, Chow Bee Lin and Becky Zhang


By: Ong Sheau Ling
+65 6780 4359



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