LyondellBasell US acetyls hike proposal will likely fail – buyers

25 January 2012 23:38  [Source: ICIS news]

HOUSTON (ICIS)--The second acetyls price increase proposed this month by a US producer has prompted doubtful responses from the market, buyers said on Wednesday.

“Forget it,” said a Latin American buyer, referring to a recent LyondellBasell proposal to raise prices on acetic acid and vinyl acetate monomer (VAM) by 2 cents/lb ($44/tonne, €34/tonne) and 3 cents/lb, respectively, in February.

The buyer said demand has improved because of the summer paint season is in progress in South America, but material is plentiful there and in Central America. The buyer said there is also competition from Asian producers.

“It’s not going to be possible to pass this through,” the buyer said.

LyondellBasell sent a letter to customers last week proposing the increases for the Americas, effective on 1 February.

The letter, dated 18 January, did not give a reason for the increase. A LyondellBasell spokesman said the company does not comment on communications with customers.

Celanese issued a similar proposal to raise prices globally on acetyls products effective on 15 January that drew lukewarm responses from buyers.

A US acetic acid buyer said neither producers’ proposals had generated any buying interest in Mexico.

Another US buyer said there is no trouble finding material around $575/tonne, which is about midway in the current US acetic spot range of $530–595/tonne.

“There’s no upward pressure at all,” the buyer said.

Some of the major feedstocks in the acetyls chain have dropped in January, including acetic acid. The present range of the US free on board (FOB) export price, $530–$594/tonne, represents an 11% drop from $615–635/tonne, where it ended 2011.

The US spot price for acetic acid feedstock methanol has also slipped in January, from an average of 114 cents/gal to 112.5 cents/gal, according to ICIS.

Front-month NYMEX natural gas futures have dropped by almost 8% during January, falling from $2.99/MMBtu in early January to around $2.76/MMBtu on Wednesday.

US spot ethylene, a major VAM feedstock, has moved up by 8 cents/lb in January from an average of 51.75 cents/lb on 3 January to an average of 59.75 cents/lb as of 24 January.

($1 = €0.77)

For more on acetic acid and VAM visit ICIS chemical intelligence

By: Lane Kelley
+1 713 525 2653

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