27 April 2012 12:24 [Source: ICIS news]
LONDON (ICIS)--Swiss petrochemicals major INEOS plans to cut May spot volumes from its 245,000 tonne/year ethyl acetate (etac) unit in Hull in the UK, but will still fulfil its contractual obligations, a company source said on Friday.
The company announced the measure following a force majeure declared by chief supplier BP Chemicals on feedstock acetic acid.
"It is important that our contract customers are reassured that we will keep inventories for them [but] we will virtually withdraw from the spot market," said a source at the Switzerland-headquartered company.
UK-based BP Chemicals has declared force majeure on acetic acid supplies from its Hull plant in the UK. The company placed its customers on a 50% allocation from midnight on 26–27 April, and they are expected to remain on allocation until the end of May.
INEOS – the only big etac producer in northwest Europe – previously declared a force majeure from June to November last year, following a similar force majeure declared by BP on acetic acid.
The 2011 INEOS force majeure led to a two-tier pricing system in northwest European markets in the second half of 2011, and helped importers from India and China increase their presence in Europe.
The INEOS company source said it expects etac prices to increase in May this year because of its restricted supply, and that a decrease of €20/tonne in the May ethylene contract price would not exert downward pressure on prices.
"In these circumstances, the ethylene decrease is not going to affect prices. Acetic acid is a very important portion [of etac, and] there will certainly be an upward movement on acetic acid, so etac prices should increase,” the INEOS source said. “The etac monthly contract price will increase, [by] how much I don’t know.”
Etac prices were assessed at €950–€980/tonne ($1,257–1,297/tonne) FD (free delivered) NWE (northwest Europe) in the week ending 20 April.
Etac market players are sceptical of an increase in prices, as slow demand and tough competition from importers for market share – which has become a hallmark of the northwest European etac market – could continue to put downward pressure on prices.
Etac is an acetate solvent produced using 30% ethylene and 70% acetic acid. It is mainly used in industrial coatings.
($1 = €0.76)
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