China’s Wanhua Chemical has declared force majeure on supplies to its Middle East customers, a company representative said on Monday.
The force majeure – a provision in a contract that relieves parties from their obligations because of an extraordinary event – came into effect on March 7, according to a letter Wanhua sent to customers and seen by Reuters.
“We are facing the severe disruption of shipping routes in the Strait of Hormuz, making delivery impossible or unreasonably dangerous,” the letter said.
The petrochemical major typically sells some of its derivatives such as isocyanates, a building block for polyurethane products used for bedding, furniture and automotive interiors, to the Middle East, traders said.
It operates two crackers, with a total ethylene production capacity of 2.2 million tonnes per year, at its site in Yantai in Shandong province.
Both crackers are still running at high rates for now, two sources familiar with the matter said.
Wanhua declined to comment when asked about any production cuts at the two crackers.
