To counter escalating naphtha costs, Formosa Petrochemical to switch to LPG, boost earnings

11-Mar-11

As oil costs escalate past US$100, and upstream naphtha at US$990 peaks to a 29 month high, Formosa Petrochemical Corp. (FPCC) plans to switch to liquefied petroleum gas (LPG) to partly replace naphtha in ethylene production. This switch will reduce material costs and boost earnings, as reported by CENS. The move will also benefit FPCC`s affiliated firms including Formosa Plastics Corp., Nan Ya Plastics Corp. and Formosa Chemical & Fibre Corp., which heavily rely on ethylene in production. At present, LPG is quoted US$84 per ton lower than naphtha. If FPCC uses LPG to partly replace naphtha, it will be able to increase gross profit by US$21 million per month in producing ethylene.