Formosa buys more LPG, less naphtha for May delivery

SEOUL, March 31 (Reuters) - Taiwan's Formosa Petrochemical Corp (6505.TW) has recently bought 22,000 tonnes of liquefied petroleum gas (LPG) for first-half of May delivery as an alternative feedstock to naphtha, industry sources said on Monday.

"Formosa bought more than its usual volume of LPG, and it is also seeking additional 20,000 tonnes for the same period," said a Seoul-based LPG importer.

With the LPG purchase, Formosa will not search for more prompt delivery naphtha cargoes for May, easing the market's premium, a naphtha trading source said.

Formosa, Asia's largest ethylene producer, had bought 75,000 tonnes of naphtha for first-half of May delivery, less than in April.

South Korean petrochemical firms, the second biggest naphtha buyers on the spot market after Japan, can use butane for up to about 20 percent of total feedstock volumes on average.

Petrochemical firms usually consider switching to LPG when prices for the alternative feedstock drop to about 90-92 percent of naphtha prices. On Monday, LPG prices were at around 90 percent of naphtha prices. (Reporting by Angela Moon; Editing by Tomasz Janowski)