Europe VAM May contracts rise by €20/tonne from April

18 May 2012 23:59  [Source: ICIS news]

LONDON (ICIS)--Vinyl acetate monomer (VAM) May contract prices have settled in the range of €900–940/tonne ($1139-1190/tonne), up by €20/tonne from April, sources said on Friday.

The contracts were concluded on a free delivered (FD) northwest Europe (NWE) basis.

The increase was driven mainly by successive hikes in upstream ethylene costs earlier in the year, which producers had not been able to pass on to consumers in full.

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

ICIS introduced a monthly contract price assessment in March 2012.

The VAM market is largely balanced, although demand in May is lower than it has been in recent months.

Sources continued to report that the European market has seen little impact from the 50% allocation imposed by energy giant BP on acetic acid supplies from its Hull, UK, plant on 27 April.

A major VAM producer is understood to be focused on fulfilling its contractual requirements. However, any loss of spot tonnes is not considered a problem, as there is little surplus demand at present.

Many participants were unavailable in the latter part of the week on account of public holidays in several European countries.

Sources said that May offtake has been negatively impacted by the large number of holidays this month.

Concerns about the wider economy and weakness in the construction sector are also undermining sentiment to some extent, although the effect does not yet appear to be too severe.

Falling crude and naphtha values are widely expected to prompt a significant fall in the June ethylene contract price.

This is likely to encourage VAM buyers to press for decreases, although producers have had to absorb large increases in ethylene costs this year, not all of which have been passed on to consumers.

($1 = €0.79)


By: Samuel Weatherlake
+44 20 8652 3214



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