Asia VAM moderately rebounds on low inventory

02 February 2009 07:05  [Source: ICIS news]

By Helen Lee

SINGAPORE (ICIS news)--Vinyl acetate monomer (VAM) spot prices across Asia rebounded moderately by 1.2-6.9% in January from near five-year lows in late December, driven by low inventories and firming raw material ethylene values, producers and importers said on Monday.

Taiwan-based producer Dairen Chemical Corp raised its VAM offers to $850-900/tonne (€663-702/tonne) cost and freight (CFR) northeast (NE) Asia/southeast (SE) Asia for late January/February loading cargoes.

The offers were up $50/tonne from December levels on account of stable-to-firm upstream ethylene values, dwindling VAM inventory levels and improving polyvinyl alcohol derivative values, market sources said.

Buyers acknowledged that prices could increase in line with higher ethylene feedstock prices but qualified that the absence of tight supply would moderate the increase.

VAM prices rose $20/tonne to $820-850/tonne CFR SE Asia at the close of business last Friday, according to global chemical market intelligence service ICIS pricing, following higher-priced February fixtures and bids.

Some end-users noted a slight improvement in demand from downstream emulsion/adhesives sector in January compared to December due to the festive season.

However, the uptrend may not be sustained due to weak activities in the real estate/construction industries amid the current global economic downturn, market participants said.

Chinese domestic VAM prices rebounded 18% in early January to yuan (CNY) 6,500-6,600/tonne ($950-965/tonne) ex-tank from late December levels of CNY5,500-5,600/tonne ex-tank due to emerging supply concerns.

This followed widespread and ongoing production cutbacks in the fourth quarter as producers made attempts to stem the price plunge.

However, prices had remained flat since then with sales volume in the key China domestic market declining prior to the week-long Chinese lunar new year holidays in late January.

The post-holiday demand outlook was uncertain as demand from end-users was not as robust and was below normal levels, a supplier of deep-sea material said.

($1 = €0.78; $1 = CNY6.84)

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By: Helen Lee
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