Taiwan's Formosa reduces operating rates at three naphtha crackers

14-Oct-08

Taiwan's Formosa plans to reduce operating rates at three of its naphtha crackers, through maintenance shutdowns, as the global economic slowdown pulls down demand and takes its toll on production margins. The crackers to be affected are the 700,000 tpa No.1 unit, the 900,000 tpa No. 2 and the 1.2 mln tpa No. 3 cracker. Run rates at Formosa's No. 1 cracker, that had been reduced by 10% in September, saw a further 10% reduction this month, along with postponement of naphtha imports for November-arrival cargoes. It is unclear when operations will return to normalcy at the No.2 cracker, where operations were at a standstill since last week due to an outage. Shut for routine maintenance in mid- September, the No. 3 cracker is scheduled to restart in the third week of this month. With this move, Formosa joins the ranks of other producers in the continent from South Korea, Japan and Singapore, struggling to cope with deteriorating market conditions. Reduced cracker production is partly due to the impact of credit crisis on Asian economies. Taiwan's government-owned CPC Corp has deferred restart of its naphtha unit for the third time last week, due to high inventory levels that have compelled it to defer delivery of a 30,000 ton cargo to mid-October from early-October. Korea Petrochemical Industry Co (KPIC) plans to reduce run rate sto 90% at its 460,000 tpa cracker. SK Energy will run its No.1 unit at 70-80% rate. Yeochun Naphtha Cracking Centre (YNCC), which operates three crackers with a combined capacity of 1.8 million tpa, will cut overall rates by an additional 5% to 20%, from the earlier cutbacks of 15%. Asian petrochemical makers will shortly be faced with fresh problems. A downturn, expected to last for atleast 3-4 years is expected to be ushered by swelling supplies of ethylene from more efficient ethane-based Middle Eastern crackers.