Formosa Chemicals & Fibre Corp. or FCFC has declared force majeure on aromatic and derivative supply as feedstock shortages linked to the Middle East conflict disrupt regional petrochemical flows, according to a company notice dated March 24 and seen by OPIS.
The producer said its upstream supplier, Formosa Petrochemical Corp. or FPCC has cut back on pyrolysis gasoline and naphtha supply due to ongoing geopolitical tensions, tightening feedstock availability for aromatics production. As a result, FCFC expects more than 50% of its aromatics production capacity to be adversely affected.
The company added that supply disruptions could extend to downstream products, including styrene monomer or SM, phenol, purified terephthalic acid or PTA and plastics, as constrained feedstock availability and auxiliary material shortages weigh on operations.
At its Mailiao site in Yunlin, FCFC operates three SM lines with a combined capacity of 1.32 million metric tons per year, comprising units of 720,000 mt/year, 350,000 mt/year and 250,000 mt/year. The 250,000 mt/year unit has been offline since June last year due to weak margins, while the 350,000 mt/year line was shut from November to mid-January for maintenance, according to market sources.
The company also operates a 500,000 mt/year PTA plant in Mailiao which is currently running. Separately, its sister company, Formosa Chemicals Industries (Ningbo) operates a 900,000 mt/year and 1.5 million mt/year PTA plant in Ningbo, China. The 900,000 mt/year unit is currently offline, while the 1.5 million mt/year PTA unit is currently running.
FCFC said it would be unable to fully meet contractual supply obligations starting April 1, invoking force majeure under contractual terms. The producer will negotiate delivery volumes and timelines with customers depending on available production.
The declaration marks an escalation in supply disruptions across the global SM and aromatics chain, as the Middle East war continues to impact shipping routes and feedstock flows through the Strait of Hormuz.
Jiangsu-based Hailun Petrochemicals Co, Jiangsu Xingye Plastics Co and Jiangyin Xingjia New Materials Co, subsidiaries of major polyester producer Sanfangxiang Group, jointly declared force majeure on all contracts, orders and deliveries to customers on March 13.
The Kuwait Styrene Co., with a production capacity of about 520,000 mt/year, earlier declared force majeure on SM supply following disruptions to feedstock availability and export logistics. Indonesia's Chandra Asri has also declared force majeure on its 240,000 mt/year SM unit, while South Korea's Yeochun NCC has warned of potential supply shortfalls amid reduced operating rates.
In the U.S., Chevron Phillips Chemical has declared force majeure on SM supply due to disruptions to imports of feedstock from the Middle East, a company source said on Friday.
The outages have begun to significantly tighten SM availability across Asia, particularly as trade flows into India and China are disrupted.
Amid a surge in Chinese export demand, market participants reported that around 42,000 mt of SM was heard transacted in the spot market last week for shipment to India. This reduced spot availability and drew down inventories in China. At the same time, India's demand has firmed sharply due to the loss of Middle East supply following the effective closure of the Strait of Hormuz, a key supply route for SM into the country.
Tight regional availability has also driven a sharp increase in import prices into China. Bids for SM cargoes rose from $1,340/mt CFR China on March 20 to $1,440/mt CFR China by March 23, a 7.5% increase. However, offers remained scarce as sellers have been withholding cargoes amid limited supply caused by cracker production cutbacks across Asia.
Domestic China prices have mirrored the upward trend. The midpoint of the OPIS ex-tank SM assessment jumped 9.4% over the same period, rising from 10,190 yuan ($1,479)/mt ex-tank to 11,150 yuan/mt ex-tank. On an import parity basis, this equates to an increase from $1,271/mt CFR China to $1,389/mt CFR China, up 9.28%.
Despite the strong price support, Chinese SM producers have been unable to significantly increase operating rates because of tight feedstock ethylene availability and elevated costs, which limit the market's ability to respond to rising demand.
"The issue now is not just demand, it's the inability to secure feedstock and move cargoes," a Singapore-based trader said. "As more producers declare force majeure, the polymer chain is becoming increasingly constrained."
Similarly, PTA prices in China have risen by 3.5% week on week to 7,004 yuan/mt ex-tank on March 23 amid increased demand and tightening supplies as PTA producers cut operating rates amid feedstock scarcity, an industry source added. Average PTA plant operating rates slipped 1.8 percentage points week on week to 78.2% on March 20, the source added.
This content was created by Oil Price Information Service, which is operated by Dow Jones & Co. OPIS is run independently from Dow Jones Newswires and The Wall Street Journal.
--Reporting by Hazel Kumari, hkumari@opisnet.com and Serena Seng, sseng@opisnet.com; Editing by Mei-Hwen Wong, mwong@opisnet.com
(END) Dow Jones Newswires
March 24, 2026 03:02 ET (07:02 GMT)
Copyright (c) 2026 Dow Jones & Company, Inc.
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