Intermediates: Acrylate prices rise on feedstocks and demand

26 March 2012 00:00  [Source: ICB]

Rising propylene costs and improved demand are driving up acrylate prices globally.

In Europe, March contracts for acrylic acid were largely settled at €1,890-1,940/tonne ($2,491-2,557) FD (free delivered) NWE (Northwest Europe), up by €70-90/tonne from February, according to a March 14 assessment by ICIS.

© Rex Features Acrylate prices are rising as acrylic painting lifts demand

Ester prices increased as well. Methyl acrylate (methyl-A) contracts were assessed at €1,850-1,910/tonne FD NWE, up by €70/tonne; ethyl acrylate (ethyl-A) at €1,900-1,950/tonne, up by €80/tonne; butyl acrylate (butyl-A) at €1,870-1,990/tonne, up by €70/tonne; and 2-ethylhexyl acrylate (2-EHA) at €2,090-2,230/tonne, up €80-90/tonne.

Market participants say that feedstock costs, rather than supply/demand dynamics, drove discussions this month, with sellers adamant that they had to recoup some of the margin lost during the first two months of 2012.

"The news referring to the pressure from the feedstocks can be found in every corner of the market," a buyer said.

Assessed at €1,015/tonne for January, the European propylene contract reached €1,195/tonne for March after two successive monthly increases of €90/tonne, driven by stronger naphtha prices and tightening cracker margins.

The acrylates sector has struggled to keep pace with the increases because of uncertain end-use demand, aggressively priced spot material from Asia and Russia and a bearish sentiment regarding the wider economic picture. "There has been a realization that producers need to raise prices in line with raw materials," said one seller.

Demand is also steadily improving, although some players still believe that buying interest peaked in February.

One major supplier disagreed, noting that the onset of the coatings season had buoyed expectations this month. Nevertheless, demand for March is still seen as healthy, and sources said that they expected it to keep gaining ground as the coatings sector's demand takes off later in the second quarter.

Ongoing upstream increases predicted for next month will continue to apply upward pressure on the acrylates sector, as will stronger prices for acrylates in both Asia and the US.

A seller who has scheduled a maintenance shutdown for mid-April suggested the interruption might restrict the availability of acrylic acid and some ester grades.

"There is also talk of delayed shipments [into Europe] and some technical problems on 2-EHA," he added, "so we could see some real supply issues soon."

Major producers of acrylic acid and acrylate esters in Europe include BASF, Arkema and Dow.

US INCREASES UNDERWAY

Acrylate contracts for the US ­market had not all settled as of March 19, but gains within the 10-12 cents/lb ($220-265/tonne) range nominated by two of the three major domestic producers had been confirmed.

One buyer reported an early contract settlement at an increase of 10-11 cents/lb. Another reported settlements at nominated increases of 10-12 cents/lb, taking 12 cents/lb on glacial acrylic acid (GAA) and methyl-A, and 10 cents/lb on 2-EHA.

No settlements had been heard at increases of 13-14 cents/lb, the high end of the range proposed by a third producer for butyl-A and 2-EHA. The effort surfaced in February, but appears to have been delayed until March, sources said.ICIS assessed February GAA contracts at $1.12-1.17/lb, a rollover from January.

Most buyers characterized the market as soft, and expect available supply to continue expanding until buying for the spring coatings season begins to gain momentum.

The increase initiatives stem from a 16.5 cent/lb, 30% increase in February contracts for feedstock chemical-grade propylene (CGP), but buyers are feeling pinched.

"My management team was upset because, of course, we can't pass along all of the inflation," a buyer said. The rate of upstream cost increases has slowed, however. Propylene contracts for March were settled at an increase of 5 cents/lb − 7% − from February.

Although no formal price-hike initiatives for April had surfaced by March 14, some sources said they expected attempted gains of 8-12 cents, despite the lower March propylene increase.

Major US producers of acrylates are BASF, Arkema and Dow.

EXPORTS LIFT ASIA PRICES

Prices are rising in Asia on healthy regional demand and attractive export opportunities to the US and Europe. The bulk of March business was concluded by mid-month, and discussions for April transactions had begun.

During the week ending March 14, the majority of regional producers were asking price hikes of around $50-100/tonne for fresh lots while citing firm energy and upstream values. In China, spot activity for imports was subdued, with buyers favoring local material because of the discount to regional parcels. Buying sentiment among Chinese end-users was mixed in response to lukewarm conditions in the derivative markets. Cautious buyers were purchasing as needed in smaller lots.

In Southeast Asia, buoyant demand and snug supply kept acrylate spot prices stable to firm. At least two regional suppliers cut back on exports because of growing requirements from local buyers.

ICIS assessed GAA spot prices in China and Southeast Asia as unchanged at $2,050-2,100 for drums on both a CIF China Main Port (CMP) basis and CIF SE (Southeast) Asia basis. Ample supply in China kept local prices unchanged at yuan (CNY) 13,300-13,500/tonne DEL. There was slight movement among the esters. In China, butyl-A prices inched up by $20/tonne at the top end of the range to $1,920-2,000/tonne CIF China Main Port (CMP). Chinese exports were offered at $2,000-2,050/tonne FOB, and several deals were concluded at that level in iso-container. Domestic values rose CNY200-300/tonne to CNY14,000-14,300/tonne DEL in line with trades concluded in a tightly supplied market.

In Southeast Asia, early April lots of butyl-A were sold at $2,000-2,120/tonne CIF SE Asia, unchanged from the previous week.

In the absence of any trade, ethyl-A and methyl-A prices were assessed unchanged at $1,800-1,900/tonne and $1,720-1,800/tonne respectively, CIF CMP.

Local Chinese prices for ethyl-A and methyl-A edged up by CNY200-300/tonne because of lean inventories. Buyers were said to have no choice but to accept the higher numbers.

In Southeast Asia, ethyl-A jumped by $30-50/tonne to $1,800-1,900/tonne CIF SE Asia reflecting deals and discussions, but methyl-A prices were unchanged amid thin trade.

Major producers in Asia include BASF, Nippon Shokuba and Formosa Plastics .

• Includes reporting by Cheong Su Yeen in Singapore and Larry Terry in Houston

By: Clay Boswell
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