Low ethylene demand, cracker shut down induce Formosa to postpone Nov cargoes by a month

06-Sep-08

Over saturation of naphtha storage tanks is hauling over Taiwan's Formosa Petrochemicals due to weak demand for ethylene in the region and a recent maintenance shutdown of its No.3 cracker. As a result, Formosa is deciding to postpone its November term cargoes by a month in order to tackle the full tank situation. Relative to its usual monthly import of 300,000 mt per month, the company bought only 75,000 mt of spot naphtha for October delivery. The firm is in talks with Vitol, Shell, BP, Sempra, Itochu and Chevron, which comprise of its CFR term sellers for Oct 08 - Mar 09 period. As per an executive, Formosa is confident of delaying 225,000 mt (three parcels of 75,000 mt each) by a month to December delivery. Moreover, Formosa's No.3 cracker shut down will be stretched further in case the demand for ethylene does not shoot up.