Water shortage hits Taiwan petrochemical production

Focus article by Nurluqman Suratman

SINGAPORE (ICIS)–Petrochemical production in Taiwan is being curtailed by water shortage, as the island is facing its worst drought in decades, industry sources said on Wednesday.

Water rationing to industrial users has been implemented since the start of the year, affecting the island’s southwestern petrochemical hub in Kaohsiung, they said.

Taiwan’s overall rainfall between October last year and March 2015 was the lowest since record keeping began in 1947, according to its Central Weather Bureau.

For heavy industrial users that consume at least 1,000 cubic meters of water each month, the rate of supply reduction was increased to 10% on 15 April from 7.5% previously, according to the Drought Central Emergency Operation Center of Taiwan.

More than 1,000 industrial water users, including petrochemical, textile, electronics, basic metals and paper producers, will be hit by the measures.

Water shortage is worse in the southern parts, particularly Kaohsiung, since it has no local reservoirs, according to news agency The China Post.

Operating rates at purified terephthalic acid (PTA) plants in Taiwan stood was estimated at an average of around 43% in March, with concerns that production will be further restricted in the near term because of the water shortage, according to industry sources.

In Xiaogang, a part of Kaohsiung County where China Petrochemical Development Corp’s (CPDC) production is located, water supply was reduced by 10%, a company source said.

“We have had to slightly reduce the plant operating rates [at the Xiaogang site], the source said.

CPDC has a 200,000 tonne/year caprolactam plant, a 100,000 tonne/year cyclohexane unit and a 100,000 tonne/year cyclohexanone unit in Xiaogang, according to ICIS data.

“In the near term, the plant operating rates at our Xiaogang site will be adjusted in line with the authorities’ water restriction measures,” the company source said.

CPDC also has a 240,000 tonne/year acrylonitrile (ACN) plant and a 160,000 tonne/year acetic acid unit in Ta-Sheh, which is also a part of Kaohsiung.

The ACN plant might have to continue running at a reduced rate of 90% next month due to water rationing, another company source said.

The Ta-Sheh petrochemical complex consists of 10 producers, making synthetic rubbers, synthetic fibre intermediates, plastic materials, etc, according to the Petrochemical Industry Association of Taiwan (PIAT).

Meanwhile, an ethylene vinyl acetate (EVA) producer that has plants in Kaohsiung has not been affected so far by the water shortage.

“Right now our production is not affected yet but the critical period is end April,” a source at the EVA producer said.

Petrochemical production at Mailiao in midwestern Yunlin County was largely unaffected, industry sources said.

Mailiao is where operations of the Formosa Group – the island’s largest petrochemical producer – are located.

Formosa Petrochemical Corp (FPCC) is running its three naphtha crackers with a combined capacity of 2.93m tonnes at the site at full capacity, a company source said.

Formosa Chemicals & Fibre Corp (FCFC) is also running its phenol/acetone plant at full capacity, said a source close to the company.

Plant operations have not been affected by tightened water supply affecting other parts of Taiwan, the FCFC source said.

Additional reporting by Helen Lee, Judith Wang, Trisha Huang, Yeow Peilin and Pearl Bantillo

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