Asian refineries, petchem firms cut runs as Iran war disrupts supplies

Asian steam crackers have been quick to declare force majeure on petrochemical supplies to customers.

A growing number of refineries and petrochemical companies, mostly in Asia, have ​cut runs, shut units or declared force majeure as the US-Israeli war on Iran disrupts crude and feedstock exports from the Middle East.

Asian steam crackers, which source more than 60 per cent of their naphtha feedstock from the Middle East, have been quick to declare force majeure on petrochemical supplies to customers.

It takes up to two weeks to restart a steam cracker unit, two operators said, and plants typically don't ⁠keep more than one month of feedstock on hand.

Here are some of the latest developments:

China

Sinopec, the world's biggest refiner by capacity, is seeking to cut throughput this month by more than ⁠10 per cent from an original plan in response to a crude supply gap caused by the war in the Middle East, according to ‌sources familiar with its operations.

Throughput is likely to fall by ​600,000 to 700,000 barrels per day (bpd) on average in March, the two sources estimated, adding that the cuts excluded losses from plant maintenance that was planned before the war began on February 28.

China's Wanhua Chemical has declared force majeure to its Middle East customers, a company representative said.

Its two crackers, with a total ethylene production capacity of 2.2 million metric tons per year, are still running at high rates for now, according to two sources familiar with the matter. The company declined to comment whether production at the two crackers was cut. Shell's south China petrochemical ​joint venture with China's CNOOC plans to shut a steam ⁠cracker soon and told domestic customers it is unable to supply some products, two sources told Reuters.

CNOOC and Shell Petrochemicals Co Ltd, or CSPC, plans to close a 1.2-million-ton-per-year (tpy) cracker in Huizhou, one of its two crackers with a total capacity of 2.2 million tpy, due to disruptions in feedstock supplies, the sources said.

Zhejiang Petrochemical Corp, a major Chinese refiner backed by Saudi Aramco, shut a 200,000-barrel-per-day unit, bringing forward maintenance in response to the Middle East conflict's impact on crude supply.

Another Chinese refiner ⁠backed by Aramco, Fujian Refining and ‌Petrochemical Co, or FREP, shut its 80,000 bpd crude unit - its smallest - for an unspecified amount of time, two industry sources said. China has also urged refiners to suspend signing new contracts to export fuel, and to try to cancel shipments already committed, sources said.

Malaysia

Malaysia's Pengerang Refining (Prefchem), ‌a joint venture between Petronas and Saudi Aramco, shut its 300,000-barrel-per-day (bpd) crude unit due to a lack of crude feedstock, sources said.

More than 70 per cent of Prefchem's seaborne crude imports last year came via the Strait of Hormuz, according ⁠to Kpler ship-tracking data.

Singapore

Singapore Refining Co (SRC) has cut refinery runs at its 290,000-bpd Jurong Island site in Singapore to around 60 per cent and is likely to maintain reduced runs until the end of the month, sources said.

SRC has cut or delayed March naphtha ‌deliveries to at least two offtakers, sources said.

Also on Jurong Island, a 592,000-bpd site owned by ExxonMobil has cut crude runs to around 50 per cent ‌or lower from around 80 per cent or more, sources said.

The refinery has sourced around 65 per cent of its crude via the Strait of Hormuz this year, ‌Kpler ship-tracking data showed.

Earlier, Singapore petrochemical firm PCS declared force majeure on shipments, according to a letter reviewed by Reuters and sources.

Singapore refiner and petrochemical major Aster ‌Chemicals and Energy declared force majeure, a company spokesperson said.

Products covered by the force majeure include ethylene and propylene. Aster's steam cracker was running at around 50 per cent on March 6, having restarted at the end of February, sources said.

Taiwan

Taiwan's Formosa Petrochemical Corp has issued a force majeure notice on some of its petrochemical supplies, an FPCC spokesperson said.

The refiner's No.2 and No.3 crackers are still operating at around ⁠70 per cent, and the company will ⁠consider shutting one cracker if naphtha stock is insufficient.

Japan

Japan's Mitsui Chemicals started to cut ethylene production in Osaka and Chiba due to a drop in naphtha supplies.

Mitsubishi Chemical on March 9 started to cut ethylene production at its plant in Ibaraki.

Sumitomo Chemical Asia said it issued a force majeure notice this week for methyl methacrylate production after its feedstock supplier, Singapore petrochemical firm PCS, declared force majeure on shipments.

Bahrain

Bapco Energies declared force majeure on its group operations, following a recent attack on its refinery complex, the company said.

Thailand

Thai petrochemicals firm Rayong Olefins, a unit of Siam Cement Group, declared force majeure due to the Middle East conflict, according to a copy of a letter seen by Reuters.

India

India's Mangalore Refinery and Petrochemicals has shut a crude unit and some secondary units at its 300,000-bpd refinery due to oil shortage, sources said.

South Korea

South Korean petrochemical company Yeochun NCC has ​cut its output and declared force majeure on its supply as it is unable to receive naphtha feedstock due to the Strait of Hormuz blockade, according to a ​source and a company letter reviewed by Reuters.

Indonesia

Indonesian petrochemical producer Chandra ​Asri has declared force majeure on all contracts as the Middle East conflict disrupted its raw material supply, it said in a statement.

Vietnam

Vietnam's Binh Son Refining and Petrochemical asked the government to prioritize supplying domestically produced crude oil to its Dung ​Quat Refinery while limiting crude exports until at least the end of the third quarter this year to ensure national security, it said in a statement.