FocusS Korea's acetate solvent demand recovery seen in 2010

30 October 2009 03:03  [Source: ICIS news]

By Helen Lee

SINGAPORE (ICIS news)--South Korea’s demand for ethyl acetate and butyl acetate solvents may not improve until next year despite a 2.9% growth in the country’s third quarter GDP, local producer and traders said on Friday.

“The current quarter’s GDP growth is fuelled by the semi-conductor and automobile industries and not the construction sector so we think the actual impact on acetate solvent demand will be felt next year,” said the country’s sole local producer, Korea Alchohol Industrial Co.

Korea Alcohol is eyeing a won (W) 50/kg ($42/tonne) price hike for October business on the back of strong ethanol feedstock costs but faced difficulties in achieving the increase due to ample supply. September business had been concluded at W1,170-1,180/kg DEL, up W50/kg from August levels.

"We are still negotiating with customers for the hike but we think we can get a W20-30/kg increase rather than W50/kg for October,” the local producer said.

Meanwhile, butyl acetate prices remained flat at $1,080-1,140/tonne CFR (cost and freight) southeast (SE) Asia throughout October after dropping $10-20/tonne compared with September business due to weak demand from the downstream furniture/automobile coatings and paints sectors, regional butyl acetate producers said.

However, the increasing market share of Korea’s consumer electronics industry boosted confidence, one producer said.

“Korean mobile phones and cars are gaining market share in Asia so demand for ethyl acetate in the special ink applications should improve,” he said.

Traders, however, expected growth from the above sector to remain constant amid high ethyl acetate inventories.

“Ethyl acetate demand from the electronics sector has been increasing constantly but I don’t think that the sector will see a sharp increase at the end of this year or early next year,” a trader said.

Meanwhile, ample butyl acetate stocks and sluggish demand in Korea continued to weigh on prices of the solvent but improving operating rates in the local automobile industry likewise lifted selling sentiment.

“Some local car manufacturers have resumed 100% operating rates in September so if their paint inventory is low, they will need to replenish soon,” said the Korea Alcohol source.

Ethyl acetate is used mainly in coatings, process solvents, including pharmaceuticals and organic synthesis as well as in printing inks. Butyl acetate is used for paint manufacturing and in the automobile industry and also as a glue for the wood coating industry.

Major ethyl acetate and butyl acetate producers in Asia include Celanese, Korea Alcohol Industrial Co., Jiangsu Sopo and Jiangmen Handsome.

($1=W1,185.32)

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By: Helen Lee
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