Rising US acrylates prices intensifies pursuit of alternatives - buyers

31 March 2011 23:55  [Source: ICIS news]

HOUSTON (ICIS)--The escalation of US acrylic acid and acrylate esters pricing during the past year has increased the development and use of substitutes for the popular monomers, sources said on Thursday.

Buyers said they are driven by economics and frustration.

A buyer said last week that a continued run-up in acrylates prices would see 'green' technologies for adhesives begin to eat into 2-ethyl hexyl acrylate (2-EHA) and butyl acrylate (butyl-A) consumption significantly, though no new technologies are being openly discussed.

“We started looking at alternatives the last time things got this bad in 2004,” another buyer said. “We continue to rely on alternative technologies, but we see the bio stuff as still too far down the road to have a significant effect yet.

“Longer term,” the buyer said, “green is an alternative, but there are petrochemical alternatives that people are exploiting already.”

The buyer said it is already substituting material for acrylic monomer, but would not divulge by how much it has been able to reduce its dependence on acrylates.

“We can’t tell you how much we’re substituting yet, but we are balancing things delicately,” the buyer said.

That balance involves lowering production costs while acrylates are expensive but resuming acrylates purchases when prices return to more palatable levels.

US acrylates prices, which increased by 8 cents/lb ($176/tonne, €125/tonne) in both January and February before rolling over in March, have been proposed up again in April by 5-9 cents/lb.

Producers cited the same fundamentals that have pushed prices up by 70-75% since January 2010, when a spate of unplanned outages that began in December 2009 severely constrained supply, even as demand had begun to improve.

Acrylates pricing also has been pressured by feedstock propylene.

Prices were somewhat stable during the US summer months and again in the fourth quarter of 2010. But overall, the trend has been higher since the beginning of 2010.

Contract values for glacial acrylic acid (GAA), for example, have increased at the low end of the ICIS range to 1.38/lb in February 2011 from 79 cents/lb in January 2010.

Developing alternatives is a necessity now, sources said, but the question remains: When will supply begin to lengthen, thereby diminishing the need for, or interest in, substitutes?

“In many cases, spending money to look at alternatives helps you come out ahead,” a buyer said. "But the advantage for buyers who find cheaper, yet workable, substitutes may be a longer-term disadvantage for suppliers.

“The situation,” the buyer said, “is that the acrylates guys don’t realise what business they’ve already lost.”

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

($1 = €0.71)

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

By: Larry Terry
1 713 525 2653

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