Buyers target US June acrylates reductions of at least 8 cents/lb

30 May 2012 22:56  [Source: ICIS news]

HOUSTON (ICIS)--US acrylic acid and acrylate esters buyers are targeting June price reductions of at least 8 cents/lb ($176/tonne, €141/tonne), sources said on Wednesday, citing soft demand, ample supply and weak upstream propylene values.

US glacial acrylic acid contract values for May are $1.26-1.31/lb, as assessed by ICIS. Reductions of 8 cents/lb would take that range to $1.18-1.23/lb.

Some 2-ethylhexyl acrylate (2-EHA) contracts were confirmed down by 7 cents/lb late Wednesday, but further reductions were said to be likely, with buyers citing May’s 10 cent/lb drop in feedstock chemical-grade propylene (CGP).

Although a couple of sources said they might be forced to accept cuts of only 6 cents/lb for June, others insisted they would push for reductions of more than 8 cents/lb, reasoning that ongoing soft demand and ample supply justified more than just the return of propylene costs from producers.

“It’s a buyers’ market,” one customer said. “The cards are laid out pretty much in one direction. Part of the reason producers don’t have any leverage is that there is too much higher-cost inventory, and they have to get rid of it.”

One source suggested that architectural coatings makers might be able to get larger reductions because that market is softer than the adhesives market, but the consensus among buyers is that demand is soft and only marginally improved over last year.

With propylene headed down again in June, further acrylates price weakness is likely this summer, a buyer added. One producer recently nominated a reduction of 8 cents/lb for the June feedstock.

May contracts recently were assessed at rollovers based on flat April propylene values, but producers have been reticent about the degree of acrylates price softening for June.

In downstream markets, US home prices fell to new lows in the first quarter of this year, Standard & Poor’s (S&P) said late in the week, casting fresh doubt on earlier data reports suggesting that the troubled housing industry might be headed for recovery.

Also, US pending home sales fell sharply in April from March, according to the National Association of Realtors (NAR).

The feedstock US oxo-alcohols 2-ethylhexanol (2-EH) and n-butanol (NBA) markets were steady from the previous week, following NBA rollovers for May, but lower pricing is anticipated.

US acrylates producers include Dow Chemical, Arkema and BASF.

($1 = €0.80)

By: Larry Terry
1 713 525 2653

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