Intermediates: Europe Q1 VAM contracts slip from fourth quarter

30 April 2012 00:00  [Source: ICB]

Vinyl acetate monomer (VAM) first-quarter contracts have been settled in the range of €850-915/tonne ($1,118-1,204/tonne) FD (free delivered) NWE (Northwest Europe), down slightly from the fourth quarter.

The price range was widely confirmed by participants on both sides of the market, although prices outside the range were also heard about.

The assessed fourth-quarter contract price range of €930-990/tonne FD NWE reflected the majority of business concluded. However, some contracts settled in the low €900s/tonne FD NWE were heard belatedly and left out of the range.

Market movement from the fourth quarter to the first was consequently more moderate than the full decline of €75-80/tonne in some cases, with roll-overs and price cuts of €20-40/tonne heard from several participants.

Decreases of €70-80/tonne were also confirmed on both sides of the market.

INCREASE FOR APRIL

Most monthly VAM contracts for April were settled in the range of €880-920/tonne FD NWE, up by €10-30/tonne from March, driven higher by rising ethylene costs.

Price increases averaging €20/tonne were confirmed by several sources. Some prices were heard below this range, but they did not appear to be representative.

Fewer European market players are involved in monthly contracts than in quarterly contracts, although some sellers price their spot tonnes at monthly intervals.

A similar upward trend was also heard on spot prices, which were discussed mostly in the high €800s/tonne and low €900s/tonne FD NWE.

DEMAND SEEN AS STRONG

A producer described the VAM market as balanced, and noted strong global demand.

The source said that rising prices are being driven by the increased cost of feedstock ethylene rather than a lack of supply.

The European VAM market is heavily dependent on imports, mostly from the US, but also from the Middle East.

The main producers in Europe are INEOS Enterprises and Celanese, with regular imports from LyondellBasell, Celanese, Dow Chemicals and International Vinyl Acetate Company (IVC).

Author: Sam Weatherlake

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