It is likely that Taiwan's Formosa Petrochemical Corp may defer some shipments of naphtha feedstock by a month, after it’s No. 1 cracker was forced to shut down following a fire that hit a liquefied petroleum gas (LPG) pipeline, as per Reuters. Because of the damage to the pipeline, the ethylene and aromatics units were shut, although they were not damaged by the fire. The 700,000 tpa No. 1 cracker uses almost 43,000 tons of naphtha a week if it is not using any LPG. Traders expect May/June cargoes to be rolled over to July. However, if the cracker shutdown is limited to a week, miniscule impact is expected.
Asian market has been witnessing strong sentiments since H2-April because of a fall in European cargoes to Asia. Deferral by Formosa could snap the strong sentiment in the naphtha market. June/July paper spreads fell US$1.88- the biggest one-day decline since January, to a more than one-month low of US$3.38/ton.
The No. 1 cracker was the same unit that was closed for a prolonged period from July to October 2010 due to a fire sparked by a leakage at a distillation tower.