SK Energy reduces naphtha run rates, Formosa shutters plant

05-Sep-08

Troubled by feeble margins, South Korea's SK Energy, has decided to cut down production by 20-25% at its No.1 naphtha cracker. Lackluster demand for ethylene in Asia has led to large inventories piling up. Naphtha is a key feedstock in ethylene production, hence weak ethylene markets are leading to disproportionate supply of naphtha in the regional markets, exerting pressures on naphtha producers. This is the reason why several Japanese players have also cut naphtha production rates. Formosa Petrochemical Corp., Asia's largest ethylene maker has a planned a maintenance turnaround at its 1.2 mln tpa naphtha cracker. The plant will remain shuttered for 45 days, affecting demand for naphtha by almost 300,000 ton.