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Wanhua Chemical, a Chinese company, declares force majeure for Middle East supplies

Wanhua Chemical, a Chinese company, declares force majeure for Middle East supplies
Wanhua Chemical, a Chinese company, declares force majeure for Middle East supplies

A?representative of Wanhua Chemical said that the company has declared "force majeure" on its Middle East clients.

According to an email sent by Wanhua to its customers and seen here, the 'force majeure' - a clause in a contract which relieves parties of their obligations due to a unforeseen event - took effect on March 7th.

The letter said: "We face the'severe disruption of the shipping routes in Strait of Hormuz which makes?delivery unreasonably unsafe or impossible."

According to traders, the petrochemical major sells its derivatives like isocyanates - a building block used in polyurethane for furniture, bedding and automobile interiors - mainly to Middle East.

The company operates two crackers with a combined ethylene production capability of?2.2 million tons per annum? at its site in Yantai, in the Shandong Province.

Two sources with knowledge of the situation said that both crackers continue to run at high rates.

Wanhua refused to comment when asked if?production cuts were made at the two crackers. Reporting by Trixie YAP and Chen Aizhu, additional reporting by Siyi Liu. Editing by Kirby Donovan.

(source: Reuters)