"Once we feel it is necessary, we may enter the spot market. It is possible," said David Tsou from the investor relations department of Nan Ya Plastics.
The move is likely to have an impact on MEG prices in Asia, which are already on the rise after the Yunlin county government ordered Nan Ya Plastics to shut its MEG plants for safety checks from 1 June following a fire at Formosa group's Mailiao petrochemical complex on 12 May.
"We don't think Nan Ya Plastics will buy material from the spot market as it will cause them to lose more," a major regional trader said.
The company's shutdown at its MEG plants caused Asia's MEG spot prices to rise to $1,245-1,255/tonne (?59-866/tonne) CFR (cost & freight) China Main Port (CMP) early on 22 June, which is a steep increase of $130-135/tonne or 12% from its prices in May.
Nan Ya Plastics is part of the Formosa group, Taiwan's largest petrochemical player. The company's plants can produce 1.9m tonnes/year of MEG, which account for 10% of Asia's total MEG capacity.
The company is drawing on its MEG inventories to supply to its domestic contract customers, Tsou said.
"We are trying our best to distribute our inventories," Tsou added. He declined to reveal the amount of the company's inventory that remains for distribution.
Nan Ya Plastics sought help from US-based Formosa Plastics Corp (FPC) for MEG supply in early June, a second company source said.
Around 15,000 tonnes of cargo for loading on 16-25 June were heard to be heading towards Asia from Texas, a shipping broker said.
"We will seek other ways by ourselves to plug the shortage of contract supply from Nan Ya Plastics," a Taiwan-based polyester maker said.
The company told ICIS that it will cut its spot exports of around 100,000 tonnes of MEG to China for July. This is the second month that Nan Ya Plastics has called off its exports.
The company has not set the dates to restart its MEG units, Tsou said. He added that resuming production at these units depends on the decision by the Yunlin county government.
"It's now up to the local government. We have started the safety checks on all the units after they were shut," Tsou said.
Nan Ya Plastics is planning to take its 360,000 tonne/year No 1 MEG unit in Mailiao off line on 1 July for 40-45 days of turnaround to upgrade the plant's facilities as there is no definite timeline for the company to restart its plants, another company source said.
Early this year, Nan Ya Plastics planned to conduct major turnarounds at its four MEG plants in Mailiao in the second half of 2011.
The company planned to shut each plant for around 40-45 days for technical upgrading, the second company source said.
The company has appealed to the county and central governments to allow it to restart operations at the facilities that were not involved in the fire in May, according to Tsou.
The shutdown of Nan Ya Plastics' plants in Mailiao will have a negative impact on domestic downstream markets, especially in the textile and pharmaceutical intermediaries sectors, president of Nan Ya Plastics, Wu Chia-Chau, was quoted as saying by The Taipei Times on 21 June.
In addition, the shutdowns at the firm's MEG units will hurt the company's revenues in the second half of this year, Tsou said.
($1 = ?.69)
