US acrylate sellers seek April price hikes as buyers object

22 March 2011 22:31  [Source: ICIS news]

HOUSTON (ICIS)--US acrylic acid and acrylate esters producers are seeking new contract price increases in April of 5-9 cents/lb ($110-198/tonne, €77-139/tonne) on rising feedstock costs and demand, but buyer frustration continued to escalate on Tuesday.

In March, buyers experienced a break from steady price gains as no broad acrylates increases were proposed because chemical-grade propylene (CGP) contract values dipped to 71 cents/lb. That was down from 74 cents/lb in February.

That respite appears to have been short-lived, sources said, because propylene contracts for April are expected to increase by at least 5 cents/lb on higher spot prices, prompting the latest acrylates initiatives.

The domestic March contract price range for glacial acrylic acid remains at $1.38-1.43/lb, as assessed by ICIS.

Sellers are “grabbing the opportunities presented by a tight market and high feedstock costs,” a buyer said. “I understand that.

"However, protecting their business and not caring about the impact this high inflation has on their customers' business is frustrating and frankly, arrogant," the buyer added. "We simply can't push through this inflation fast enough to our customers.”

Some buyers anticipated that the March softness might signal the onset of acrylates price declines. One buyer said that was too hopeful, but that it expected softer pricing by the beginning of the third quarter, at the earliest.

Producers defended their April initiatives, citing raw material costs and strong demand that continues to outpace supply.

No producers anticipated near-term acrylates price weakness, but one seller said this and other markets are typically “efficient in that they will adapt and reduce price pressure as more capacities come online.”

Although near-term global expansions are needed, buyers and sellers said, none are scheduled beyond additional acrylic acid capacity due on stream in China in the second half of this year.

Customers said the burden of unrelenting price increases extends beyond their own bottom lines.

“Our customers don't understand these volatile markets, and they expect us to share the inflation pain with them,” a buyer said. “This will not last, and the shoe will be on the other foot. Buyers have long memories.”

Major producers of acrylates in the US include Arkema, Dow and BASF.

($1 = €0.70)

For more on acrylic acid and acrylate esters visit ICIS chemical intelligence

By: Larry Terry
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