7th fire this year in Taiwanese refinery depresses Asian tanker market… seriously Taiwan, WTF?

Photo: Liao Shu-ling, Taipei Times

SINGAPORE (Dow Jones)–The freight market for vessels carrying clean petroleum products may weaken in the coming days, reversing gains since mid-July, as Taiwan’s Formosa Petrochemical Corp. (6505.TW) has halted exports after another fire.

The company, one of Asia’s largest exporters of gasoil and gasoline, was forced to shut its 540,000-barrel-a-day refinery in Mailiao indefinitely after a fire–the seventh in a year–broke out Saturday.

As Formosa usually ships out at least 600,000 metric tons of clean products a month, demand from charterers may slow down in the coming weeks, shipbroker Simpson, Spence & Young said in a note.

The freight rate for a 75,000-ton LR-2 cargo from the Middle East to Japan was last assessed Monday at Worldscale 127.29, down from W128.21 a week ago, Baltic Exchange data showed. The rate for a 55,000-ton LR-1 cargo for the same route was up 0.69 point at W129.19.

Also, the rate for a 30,000-ton tanker from Singapore to Japan rose to a three-week high of W153.93 from W147.73.

The rate for a 260,000-ton Very Large Crude Carrier from the Middle East to Japan dropped to a six-month low of W47.74 Monday, from W49.71 a week ago. The cash cost was assessed at minus $1,037 a day, around its record low.

Persistently weak chartering demand continues to plague sentiment, as manufacturing activity is slowing in China, Europe and the U.S.

Data from Meiwa International showed only 61 cargoes are fixed to be lifted this month so far, down from 102 lots a year ago, although booking ends only two weeks later.

The rate for a VLCC from West Africa to China fell to its yearly low of W44.87 from W47.50, and the 80,000-ton Aframax rate from Southeast Asia to the east coast of Australia eased to W97.06 from W97.17.

-By Max Lin, Dow Jones Newswires

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