Recent demand from Formosa Petrochemical Corp could help absorb surplus naphtha from the Middle East, and could result in an uptrend in naphtha prices. The Asian market was majorly impacted after Formosa stopped buying due to closure of its 540,000 bpd refinery and 700,000 tpa No 1 cracker in Mailiao following separate outages last month, as per ICIS. The No 1 cracker is likely to be restarted late September or early October coupled with postponement of a turnaround at its 1.03 mln tpa No 2 naphtha cracker, to the end of September or early October for around 40-45 days.
The Taiwanese major has bought via tender 150,000 tons of naphtha, for delivery in the H2-September, at a discount of US$2-3/ton to Japan quotes CFR (cost and freight). Its earlier purchases this month include 30,000-50,000 tons of naphtha for H1-September delivery at a discount of US$5-7/ton CFR Japan. Since one of its three crude units has remained shut, Formosa’s demand for naphtha supply will persist. Two of the three crude distillation units (CDU) at the refinery, which have a capacity of 180,000 bpd each, are back on stream at full capacity- one on 29 July, the second on 3 August. The third CDU continues to be shut and is not expected to come back on stream until October due to maintenance.