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September 20, 2017

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Despite blasts, city-wide supplies of petrochemicals normal in Kaohsiung

TAIPEI, Taiwan -- Although the series of explosions in Kaohsiung Thursday night has left several petrochemical delivery pipelines closed, the petrochemical industry in the southern city said Saturday that raw material supplies used in production remain normal.

Kaohsiung authorities ordered four pipelines used to deliver chemicals such as ethylene and propylene after the blasts late Thursday that killed at least 28 and have left 286 injured. An investigation is underway to find the cause of the incident.

Saturday's news came as a relief to the market, which had feared that the suspension of the four pipelines could lead to a shortage of raw materials and impact production at petrochemical companies in Kaohsiung, including USI Corp., China Petrochemical Development Corp., Oriental Union Chemical Corp. and LCY Chemical Corp.

Most local chemicals companies reassured that delivery pipelines outside of downtown areas are still functioning and there has been no supply shortage so far.

The four closed pipelines belong to CPC Corp. and USI's subsidiary, China General Terminal & Distribution Corp. (CGTD)

USI said while some propylene deliveries have been affected by the shutdown, supply from other pipelines operated by CGTD in suburban areas remains normal and will have little impact on the company's operations.

For its part, China Petrochemical said it has added a number of deliveries by truck to offset the impact and ensure the company has sufficient raw materials for production.

China Petrochemical said that to protect against any possible emergency shortage, it has lowered slightly its production amount for one week, knocking sales down by about NT$36 million (US$1.2 million).

Compared with consolidated sales totaling NT$17.15 billion in the first half of this year, the impact from the expected sales decline will be limited.

Oriental Union said as its production base is in the Linyuan Industrial Park, which is far from where the explosions occurred, and raw materials it needs come from CPC's naphtha cracking plant in the same industrial zone, it is unlikely to be affected by the pipeline shutdown.

On Friday, local petrochemical stocks came under heavy downward pressure on the Taiwan Stock Exchange with the petrochemical sub-index down 1.22 percent in the wake of the explosions.

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