Methanol factor splits Europe Q4 acetic acid market

05 October 2007 16:58  [Source: ICIS news]

LONDON (ICIS news)--European acetic acid buyers and sellers on Friday reported sharply differing ideas of the impact of soaring methanol costs on fourth-quarter contracts.

Methanol is the main feedstock for acetic acid and market reports suggested that, with prices in excess of €400/tonne on offer, fourth-quarter methanol contracts could settle €147/tonne ($207/tonne) or more above third-quarter levels of €218/tonne FOB (free on board) Rotterdam.

The increases were “clearly going to have a marked effect on acetic acid”, an acetic acid producer source said on Friday.

The producer in question, which had recently pushed up its indications for fourth-quarter acetic acid from €50/tonne to €80/tonne, said that even if it achieved the higher increase, it would not be able to cover rising feedstock costs.

Several manufacturers of acetic acid had already announced fourth-quarter price increases of €50/tonne or more before the recently mooted methanol increases.

Acetic acid consumers rejected talk of fourth-quarter contract increases fuelled by rising feedstock costs, pointing to €70/tonne third-quarter increases which followed a spate of outages in the US, tightening global supply.

“For us, it’s clear that even with a methanol price of €400/tonne, which is absolutely ridiculous and totally speculative, we are looking for a rollover in the fourth quarter,” said one buyer source on Thursday.

Several consumers also pointed out that when methanol contracts had fallen earlier in 2007, the decrease had not been reflected in the acetic acid price.

“That’s not going to fly,” said another buyer source on Friday, adding that producers were making “enough margins on high prices anyway”.

Major suppliers of acetic acid in Europe and the US include BP, Celanese, Celanese-owned Acetex, Lyondell, DuPont and Wacker Chemie.

($1 = €0.71)

By: Alex Martinos
+44 208 652 3214

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