Formosa Petrochemical extends Taiwan cracker shutdown due to weak derivative margins
Formosa Petrochemical Corp (FPCC), Taiwan's largest private refiner, will extend the shutdown of the oldest cracker at its Mailiao complex indefinitely, a company spokesperson said on Wednesday, as it reduces ethylene output due to weak margins.
The no. 1 cracker, which has a capacity of 700,000 metric tons per year (tpy), will be shut down indefinitely, FPCC spokesperson KY Lin told Reuters. It has been shut down since September 2025.
It would be the first time ever that FPCC shut down one of its crackers for more than a year, Reuters records from the past three years showed.
The extended shutdown reduces FPCC's ethylene capacity by nearly a quarter and cuts some of its import demand for petrochemical feedstocks, naphtha and liquefied petroleum gas. Formosa is among the largest buyers of these products in Asia, importing around 37.5 million barrels of naphtha annually over the past three years, Kpler ship-tracking data showed.
FPCC's plan to reduce its petrochemical output comes as other producers around the world, grappling with oversupply and poor margins, have also closed plants.
Shutdowns. In an effort to reduce operating costs, FPCC is also looking at shutting down its 1.035 million tpy No. 2 cracker for a few months while raising operating rates at its 1.3 million tpy No. 3 cracker to 100%, Lin said. Both units are currently running at 70% to 75% of their capacity.
All three crackers have a combined production capacity of 2.935 million tpy of ethylene, a building block for key plastic derivative products.
In August, the company plans to shut the No. 3 cracker for maintenance, Lin said. It is currently being retrofitted to allow for the processing of cheaper ethane feedstock from 2027.
FPCC's parent, Formosa Plastics, recently said in a filing that its 2025 loss widened to T$10.05 billion ($318 million) from a year-earlier loss of T$1.23 billion.
FPCC reported that its 2025 operating revenue for its naphtha cracking business fell 1.2% from a year earlier due to lower petrochemical prices.
"Given the projected supply-demand imbalance in the ethylene market between 2026 and 2029, it is essential for Taiwan to promptly initiate capacity consolidation to improve industry efficiency and resolve overcapacity issues," said Amy Yu, a senior analyst at ICIS, a global petrochemical pricing agency.
Elsewhere in the region, ExxonMobil will wind down operations at its 900,000 tpy cracker in Singapore, while South Korea plans to overhaul it sector by cutting ethylene production by up to 37 million tpy.
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