Tight supply pushes prices even higher

09 October 2000 00:00  [Source: ICB]

VAM prices continue to rise in Europe and the US. European quarter four prices are set to rise by between DM175-200/tonne ($79-90), which would bring contract prices up to DM1900-2000/ tonne.

Leading sellers confirm they have concluded some quarter four contracts at the higher numbers but admit that in certain instances negotiations are set to continue, although they are extremely confident of obtaining the full increase.

VAM supply is very tight in both Europe and the US. In recent years low prices and limited margins have limited investment in the industry. The next worldscale VAM plant is not due onstream until mid-2001 when BP commissions its 250 000 tonne/year UK unit. But older capacity at Porto Marghera and Baglan Bay will be closed once the new unit is up and running, wiping 170 000 tonne/year from the market.

The current tightness of VAM is likely to be exacerbated by Acetex's five week closure of its 150 000 tonne/year VAM plant in France, which will be out of action from mid-November for a maintenance turnaround.

VAM plants are said to be registering operating rates of above 90% with demand running at between 4-5% in 2000 - well above expected levels.

US prices rose by 3 cent/lb in October with further increases thought to be in the pipeline.

Frank Jeffe, Union Carbide's monomers business manager, said the implemented 3 cent/lb October VAM price hike is necessary due to high feedstock costs and high global operating rates of above 90%.

A tightly balanced world-wide supply and demand situation is also supporting the higher numbers.

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