US VAM Q1 contract settles up 4.5 cents/lb on ethylene - sources

29 March 2011 23:46  [Source: ICIS news]

HOUSTON (ICIS)--US vinyl acetate monomer (VAM) prices began moving up during the past week as initial quarterly settlements started coming in, market sources said on Tuesday.

Buyers attributed the 4.5 cent/lb ($99/tonne, €70/tonne) increase in the contract settlement and $100/tonne hike in the spot FOB (free on board) export price to increases in the feedstock US ethylene contract.

VAM’s share of the ethylene increase, generally considered about 35%, drove up the monomer’s price by 4.5 cents/lb, according to sources.

Buyers disagreed with producers about VAM demand, however.

Buyers said demand has not changed and remained weak, pointing to the continuing slump in the US housing market. That market uses architectural paint, a major VAM downstream product.

Producers cited tight VAM supplies as also driving the increases.

Dow Chemical issued a letter to customers on 24 March, according to sources, saying it wanted to increase VAM prices by 5 cents/lb in North America on 1 April. LyondellBasell issued a similar proposal earlier this month.

Dow did not respond immediately to phone calls seeking more information on the letter.

Another factor in the VAM increases came from Celanese, which declared force majeure (FM) on European acetic acid, VAM and other related products late last week, market sources said on the sidelines of the International Petrochemical Conference (IPC).

Celanese officials would not talk about the move. A spokesman said the company did not comment on the operational status of its plants.

It was not immediately clear why the FM had been declared, but sources said the impact of Celanese's China operations may have affected European production.

($1 = €0.71)

For more on VAM visit ICIS chemical intelligence

By: Lane Kelley
+1 713 525 2653

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