Limited stock may help margins

24 March 2003 00:00  [Source: ICB]

Further restrictions in acrylic acid supply should support producers' attempts to improve margins from the second quarter (Q2) onwards.

A snug Q2 is predicted, with acrylic acid availability expected to tighten due to a number of planned shutdowns and propylene feedstock is predicted to be in short supply.

Leading producers have proposed price hikes for Q2 contracts, ranging from E120-180/tonne. Suppliers say they anticipate another steep rise in raw material costs. Current European plant operating rates are assessed at over 90%, say industry sources.

Acrylic acid demand has been 'satisfactory' in quarter one (Q1), boosted by new superabsorbent polymers capacity. During the first two months of the year, the market has been reasonably balanced. One of the reasons for this has been the reduction in imported volumes from Asia into Europe. This phenomenon began last year and looks set to continue as long as Asian feedstock costs remain high. Producers confirm that, year-on-year, imports from Asia have fallen.

During Q1, suppliers say they have increased contract prices by an average of E50/ tonne, covering the E53/tonne Q1increase in propylene. The average gross price for Q1 settled at E1135/ tonne. Producers emphasise that the increase has not compensated for the margin erosion the industry experienced last year.

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