To benefit from cheaper LPG relative to naphtha; Formosa to more than double LPG storage

18-Aug-08

Recently, the cheaper LPG prices relative to naphtha have led to a lot of Asian petrochemical firms to switch to LPG (Propane or Butane) as a raw material against naphtha. On Friday, propane was assessed at US$860/mt and butane at US$890/mt CFR Japan. On the other hand, naphtha was valued atleast 150-180 dollars more. As a result, it is far more economical to crack LPG than naphtha. Seeing the trend, Taiwan's Formosa Petrochemical Corp is set to add two refrigerated storage tanks of 50,000 mt each for butane and propane to the currently available storage tanks of 40,000 mt for butane and propane. The up gradation of its LPG storage facilities will be complete by 2010. For August delivery, Formosa has bought 110,000 mt of refrigerated LPG, up from a total of 44,000 mt in July and 66,000 mt for June. Last Thursday, FPC bought its first September LPG cargo of 22,000 mt.