Force majeure on BP VAM strains Europe market

13 July 2007 12:48  [Source: ICIS news]

LONDON (ICIS news)--BP has declared force majeure on vinyl acetate monomer (VAM) from its Hull, UK, plant for July in a move which will further tighten supplies in Europe, a company source said on Friday.

Production at the 275,000 tonne/year plant was forced to a halt on Thursday after what the source described as a “plant operational failure”.

The mechanisms of the problem were fully understood and the plant would be restarted as soon as possible, the source added.

This most recent force majeure would inevitably lend to the tightness of the market, according to the BP source, with one buyer in the market saying that supply was now reaching “situation critical”.

A source at another major producer said that pipeline and inventory supplies had now completely run out.

“Demand for us is now outstripping supply,” he added.

European VAM supply has grown increasingly tight since major US producer Celanese declared force majeure on acetic acid and downstream acetyls including vinyl acetate from its 1.2 million tonne/year plant at Clear Lake in Texas.

Recent weeks have seen VAM spot pricing reach record highs of €1,010-1,100/tonne ($1,384-1,506/tonne) FD (free delivered) NWE (northwest Europe), with unconfirmed deals reported in excess of €1,140/tonne FD NWE, according to global chemical market intelligence service ICIS pricing.

Third-quarter contract negotiations have been moving around the seller idea of a €100-110/tonne increase on the second-quarter contract, which was assessed within a range of €1,322-1,357/tonne FD NWE.

Other VAM producers in Europe include Celanese, Celanese-owned Acetex Chemie and Wacker Chemie.

($1 = €0.73)

By: Peter Salisbury
+44 20 8652 3214

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