Europe etac players in pricing tug-of-war as INEOS FM continues

14 October 2011 17:46  [Source: ICIS news]

LONDON (ICIS)--European ethyl acetate (etac) spot market players continue to differ on supply and demand, after a major producer extended its force majeure for the fifth consecutive month, industry sources said on Friday.

This has led to a two-tier pricing system in the northwest European markets, sources added.

INEOS – the biggest etac producer in Europe, with a nameplate capacity of 245,000 tonnes/year – has been out of the spot market since June, when it declared a force majeure on its supply.

Instead, the market’s supply has come from imports and a couple of smaller producers in northwest Europe, some of which said buyer enquiries have increased in October.

“Demand has improved from September since the de-stocking phase is over, and they are buying fresh product,” said one etac distributor.

Sources said this has pushed prices up by €50–80/tonne ($69–111/tonne) since last month.

“Enquiries have definitely increased, and we see prices moving up,” a smaller European producer said.

“New customers have approached us asking for product. We think prices are going up. It is a nervous market and there is no product,” said an importing producer from Latin America.

A distributor added: “Customers lack stock. It is possible there are odd spot deals out there at lower levels, but why would customers buy at higher levels from us if they know there are lower prices available everywhere?”

Although the distributor disputed the presence of two-tier pricing in the market, it agreed that “producers short on product are certainly looking for a higher price, but some importers still have product in the tanks they want to sell off.”

Sources said offers and deals did not fall below a range of €990–1,030/tonne FD (free delivered) NWE (northwest Europe).

The second group of distributors, and some buyers, maintain that prices are on a downward trajectory – a result of slow demand and good supply from imports, including from eastern Europe, Brazil, India and China.

Offers and deals reported by the sources were quoted in a range of €930–960/tonne FD NWE.

“The regular volumes of imports are currently enough to meet demand,” said a distributor.

A buyer added: “You get better prices from imports, [but] product from the local producers is on the high side.”

The source maintained that the general market is shrinking, however, as etac buyers – primarily involved in the industrial coatings sector – seek to de-stock before the approaching winter.

Etac prices are currently assessed at €950–1,010/tonne FD NWE.

($1 = €0.72)

By: Cuckoo James
+44 (0) 208 652 3214

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