Key facts
- Formosa shut its base oil unit on June 29 due to a technical issue with its upstream vacuum distillation unit.
- The issue has cut off base oil feedstock, impacting heavy-grade output.
- Production is expected to resume by mid-July.
- Bulk shipments are deferred to late July, while flexibag supplies are deferred to mid-July.
- Asian fob export prices for Group II N150 and N500 fell by $30/t to $1,745/t in the week ending June 26.
Taiwanese refiner Formosa has shut its base oil unit as of June 29, 2026, due to a technical issue with its upstream vacuum distillation unit that has disrupted feedstock supply. The company's base oil distributor reported the shutdown.
Base oil production is anticipated to restart by mid-July. Spot offers have been temporarily paused, with bulk volume shipments most affected and deferred to late July. Flexibag supplies are seeing deferrals only until mid-July, while term allocations remain unchanged.
The upstream technical issue began around June 10, curbing feedstock primarily for heavy-grade base oil. The 600,000 t/yr Group II refinery is slated for a 45-day maintenance period in mid-October.
Market reaction to the shutdown was subdued, as buyer demand has been weakening due to lower feedstock values and expectations that a US-Iran peace deal could further pressure prices. Argus-assessed Asian fob export prices for Group II N150 and N500 decreased by $30/t to $1,745/t in the week ending June 26.