US VAM buyers should settle Q4 for less - buyer

04 November 2008 18:12  [Source: ICIS news]

(Adds new wording for clarity in paragraph 1)

HOUSTON (ICIS news)--Buyers of US vinyl acetate monomer (VAM) who are pondering a rollover on their fourth-quarter contracts should push for lower prices, a buyer said on Tuesday.

"It's going down, big-time," the buyer said of the last-quarter VAM settlement, noting major drops in the price of feedstock ethylene and natural gas. "There's no way you can justify a rollover."

Ethylene prices fell 11% in October, natural gas dropped 8% and crude plunged 37%, according to global chemical market intelligence service ICIS pricing.

One VAM buyer said a producer had given a reduction of 2 cents/lb ($44/tonne or €35/tonne) for the fourth quarter, while another buyer said a producer was offering a 4-6 cent/lb reduction. The latter buyer also said another supplier was offering only a rollover.

But a producer said in October that customers would get rollovers, not price cuts.

The buyer who said VAM feedstock declines warranted large reductions said 5-cent/lb cuts were the minimum to be expected. "There's a good chance it's going to be more than that," the buyer said.

Most sources said final fourth quarter settlements are still a few weeks off.

US VAM contract prices were assessed at 67-71 cents/lb, according to ICIS.

Major US VAM producers include Celanese, Dow Chemical, DuPont and LyondellBasell.

($1 = €0.79)

For more on vinyl acetate monomer, visit ICIS chemical intelligence
For more on Celanese, Dow, DuPont or LyondellBasell, visit ICIS company intelligence
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By: Lane Kelley
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