US VAM buyers, sellers divided over Dow deal

10 July 2008 21:07  [Source: ICIS news]

HOUSTON (ICIS news)--Dow's proposed acquisition of Rohm & Haas drew different reactions from buyers and sellers in the US vinyl acetate monomer (VAM) market on Thursday.

Dow is one of the larger US VAM producers, and Rohm & Haas one of the largest buyers, using the petrochemical in creating emulsion polymers sold to paints and coatings manufacturers.

A seller said the deal made sense because Dow will be able to move its material a lot easier by buying a large user. "Dow was never really very competitive with VAM anyway," the seller said.

The main feedstock of VAM is acetic acid. Among major US producers, Dow is the only one that does not make its own acetic acid.

The seller added that Dow was a competitor and he had a business reason for hoping the deal succeeds.

"It's a positive thing for us, because any time your competitor takes on a lot of debt they've got to go out there and make money," he said.

But VAM buyers differed, saying there are likely legal problems that could stall the transaction. "I would think there will be many antitrust laws to be overcome," one buyer said.

Another buyer said Dow's recent price-hike announcements containing dour language about soaring fuel costs might seem like a false alarm to buyers reading about the company's nearly $19bn all-cash acquisition of Rohm & Haas.

"Their announcements (on fuel prices) were mainly window-dressing and the reality is quite different," the buyer said.

US VAM contract prices during the week ended 4 July were assessed at 63-67 cents/lb ($1,389-$1,477/tonne or €889-945/tonne) and FOB export prices at $1,200-1,250/tonne, according to global chemical market intelligence service ICIS pricing.

($1 = €0.64)

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By: Lane Kelley
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