NPRA ’11: US acrylates buyers contend with ongoing sellers market

28 March 2011 21:32  [Source: ICIS news]

SAN ANTONIO, Texas (ICIS)--US acrylic acid and acrylate esters contract prices will continue to rise at least until the third quarter and likely well into early 2012 on tight supply, sources said on Monday on the sidelines of the International Petrochemical Conference (IPC).

“I think acrylates will stay snug for the next year or five quarters if the paint season is strong,” a buyer said.

Tight supply and escalating feedstock costs have been larger factors than demand - a topic on which opinion differs markedly.

Producers are optimistic on the spring coatings season that is just getting underway, but buyers have predicted a soft season, based partly on new-home and resale statistics that are middling to poor.

Buyers’ most prominent point of contention with sellers is the unrelenting and, they say, unreasonable push to raise prices despite a buy-side consensus that sellers have already achieved premium margins and that prices are at reinvestment levels.

Two sellers have insisted pricing is not yet at levels sufficient to justify investment in significant expansion. Regardless, the completion of any domestic project would be years away.

Buyers say producers are short-sighted.

“They are playing this hand - a seller’s market - but we have a long memory,” a buyer said. “The scales will tip, and there will be hell to pay.”

The market is now strictly cost driven, buyers said. The market will move with contract propylene, which has been proposed up by 10 cents/lb ($220/tonne, €156/tonne) and 11 cents/lb for April.

Meanwhile, the threat of production problems looms over a market still beset by the lasting effects of unplanned outages that plagued the industry beginning in late 2009 and through the early part of 2010.

At this point, any unplanned outage in North America would be “devastating”, a buyer said.

US acrylates suppliers include Dow Chemical, Arkema, BASF and Sasol.

Hosted by the National Petrochemical & Refiners Association (NPRA), the IPC continues through Tuesday.

($1 = €0.71)

For more on acrylates, visit ICIS chemical intelligence

By: Larry Terry
1 713 525 2653

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