Formosa shuts Taiwan base oil unit on upstream issue

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.