Formosa cancels term PX contract after explosion

Taiwan's Formosa Chemicals & Fibre (FCFC) has cancelled term paraxylene (PX) contracts with Chinese buyers for April and May arrivals after an explosion at its aromatics complex in Mailiao earlier this week.

Chinese purified terephthalic acid (PTA) producers received cancellation notices yesterday for PX deliveries this and next month. Details of the volume affected could not be confirmed.

The cancellation comes after the explosion at Formosa's No.3 aromatics complex on 7 April, which forced a shutdown of operations.

Formosa's own PTA plant in Ningbo, east China has yet to receive any notification of a reduction in PX volumes as a result of the disruption. Formosa's Ningbo unit can produce up to 1.2mn t/yr of PTA. The company has scheduled a turnaround at the unit for two weeks in May.

There has been no immediate impact on the company's PTA production in Taiwan, where Formosa is running its 550,000 t/yr Mailiao No.1 PTA and 700,000 t/yr Loong-der No.3 PTA units normally.

FCFC bought April- and May-arrival PX in the spot market yesterday to cover the production losses, including US and southeast Asian origin supplies.

It is unclear when the No.3 aromatics complex will resume operations. A restart will require government approval after the completion of an investigation and safety checks.

Formosa's No.3 unit can produce up to 870,000 t/yr of PX and 510,000 t/yr of BZ.

The bid for the May/June intermonth spread for PX increased to a $10/t backwardation in the spot market today, with no sellers responding.