US acrylates producers should share margin pain - buyers

20 January 2011 00:08  [Source: ICIS news]

HOUSTON (ICIS)--Additional US acrylic acid and acrylate esters price increase initiatives for February drew a call for producers to “share the pain” of shrinking margins in the face of rapidly rising feedstocks, a buyer said on Wednesday.

Dow Chemical said that it plans to increase contract prices on its acrylates by 12 cents/lb ($265/tonne, €199/tonne) effective on 1 February. Dow specifically cited the rising costs of propylene and acetone and its need to maintain investment-level margins.

Arkema announced on Wednesday that it planned to raise contract acrylates prices by 6 cents/lb for 1 February, but did not cite specific reasons.

BASF had previously cited escalating costs as its rationale for planned 9 cent/lb increases, also effective on 1 February.

“This new inflation in 2011 is very painful,” a buyer said. “Our business cannot tolerate it. We feel it is time for the producers to start sharing some of the pain. Enough is enough.”

The market was still negotiating January initiatives ranging from 6 cents/lb for all products to as much as 16 cents/lb for 2-ethylhexyl acrylate (2-EHA).

The buyer said it could intellectually justify an average increase for January of no more than 8 cents/lb for most products based on stronger propylene prices, but said it is still struggling to catch up with acrylates price gains in 2010 by pushing through increases to its customers.

Another buyer said the highest January initiatives for 2-EHA clearly included “a market-tightness premium” at the top end.

A third buyer took a more long-range view of the January and February initiatives, especially those from Dow.

“I think they can justify a significant portion of the February increase,” the buyer said. “However, when you look at the other increases they have implemented over the past months that were not justified by feedstock costs, they will likely have difficulty justifying this full increase.”

While Dow may successfully implement its January (plus 8 cents/lb) and February initiatives, the buyer said, "it could create near-term demand destruction, forcing them to soften their price position in the next few months".

($1 = €0.75)

For more on acrylic acid and the acrylate esters, including butyl acrylate, visit ICIS chemical intelligence
To discuss issues facing the chemical industry, go to ICIS connect


By: Larry Terry
1 713 525 2653



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