US Jan acrylates gain 8 cents/lb on tight supply, feedstock pressure

09 February 2011 21:32  [Source: ICIS news]

HOUSTON (ICIS)--US acrylic acid and acrylate esters contract values for January were assessed up by 8 cents/lb ($176/tonne, €128/tonne) amid tight supply and feedstock pressure, sources said on Wednesday.

January price-hike efforts from the three major producers ranged from 6-16 cents/lb. While some deals were confirmed at both extremes, most buyers and sellers conceded that gains were largely moderate.

The increase took January glacial acrylic acid to a range of $1.30-1.35/lb, as assessed by ICIS.

Some buyers argued that the lower January initiatives appeared geared toward maintaining margins, while high-end proposals were interpreted as margin grabs.

Still, customers had little alternative but to take product at any price it was available, market sources said.

In some limited instances, higher prices were paid even by large-volume customers, producers and buyers said.

“Some accounts just needed the product, and price was not that important,” a producer said.

A buyer concurred, saying it paid a 12 cents/lb hike for its butyl acrylate (butyl-A), though it argued for less.

Buyers accepted the acrylates gains begrudgingly, but conceded intense pressure from tight supply and feedstock chemical-grade propylene (CGP) prices, which rose in January by 15 cents/lb from December.

The sharp propylene increase stemmed from tight supply and higher spot prices, including a 42% surge in refinery-grade propylene (RGP) spot prices in December.

Supply is short, an acrylates buyer said, “but every now and then we’ll be offered an extra railcar or container. We’re getting what we need, but it’s still tight.”

February CGP contracts, however, appeared headed for a rollover at 74 cents/lb.

February acrylates increase initiatives range from 6-12 cents/lb and prompted further sentiment from buyers that sellers should “share the pain” of rising costs.

Buyers said continued price gains have become difficult to pass along. If the newest efforts are pushed through, they could diminish downstream demand in a market hoping for stronger coatings and adhesives demand this spring and beyond, buyers said.

Market conditions are pushing prices up now, a producer said, but added that prices would likely correct themselves, perhaps late in the year.

Some buyers agreed, pinning hope in new capacity expected on stream in Asia during the second half of 2011.

US acrylates producers include Dow Chemical, BASF and Arkema.

($1 = €0.73)

For more on acrylic acid and acrylate esters visit ICIS chemical intelligence
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By: Larry Terry
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