03 April 2012 05:05 [Source: ICIS news]
By Trisha Huang
MELBOURNE (ICIS)--Asia ethyl acetate (etac) prices may extend gains on the back of a supply disruption in Japan, firmer feedstock acetic acid values in China, and planned maintenance at a major plant in China this month, market sources said on Tuesday.
“Etac prices may go up by $10-20/tonne (€7.50-15/tonne),” said a trader who buys cargoes from ?xml:namespace>
Etac prices for the week ended 30 March were assessed at $965-975/tonne FOB (free on board)
Showa Denko operates another 50,000 tonne/year etac plant located at Merak in
The company is bringing in etac shipment from its Indonesian plant to help meet the supply shortfall, market sources said.
However, several market participants said
“The length of the Showa Denko outage is the key issue,” a trader said. “Product availability in
These end-users prefer to use Japanese-produced material as they are very quality conscious, while others are not able to use ethanol-based products, he added.
“However, there is ample supply of Chinese material in the market. Therefore, even if
On 28 March, Showa Denko announced it will temporarily suspend operations at its
In addition to a possible rise in Japan’s spot demand, China’s largest etac producer, Jiangsu Sopo Chemical, is planning to shut its 500,000 tonne/year etac plant at Zhenjiang in Jiangsu province from around 20 April for 20 days of maintenance.
A concurrent overhaul to be carried out at Jiangsu Sopo’s 1.2m tonne/year acetic acid plant, coupled with news of an acetic acid plant outage in southeast Asia three weeks ago, have bolstered buying sentiment and sent acetic acid prices in China higher.
As a result of the feedstock price increase, etac prices in
Domestic etac prices in east
However, the upbeat market sentiments were tempered by an expected etac supply increase in the second quarter, with two producers set to bring onstream an additional 300,000 tonne/year of etac capacity.
In the second quarter,
Wuxi Baichuan plans to produce 100,000 tonne/year of etac and 200,000 tonne/year of butac when commercial operation begins.
The ample supply has curbed etac’s feedstock-led price gains, forcing many producers to operate with negative margins.
Feedstock acetic acid prices increased by 3.1% since early January, to close at an average of $412.50/tonne FOB
In comparison, etac prices have risen by less than 1% over the same period to an average of $970/tonne FOB
“Weak margins have also capped
Local sales have been “disappointing for the past several months”, said the major producer.
“Our production costs have gone up, but it’s been difficult for us to even maintain etac pricing stability because [domestic] demand hasn’t kept up with the supply increase,” the major producer added.
“This is a case of classic oversupply,” a northeast Asian buyer said.
Sopo’s maintenance shutdown will tighten supply and support the proposed price hikes by Chinese producers, the buyer said.
“Etac prices may go up a little because of these cost pressure,” the buyer said.
“However, the upcoming capacity expansions will only worsen the oversupply, and will mean that competition among Chinese producers for both domestic as well as the export markets will intensify, so that may limit the upside to any etac price increase,” the buyer added.
($1 = €0.75)
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