24 August 2012 18:05 [Source: ICIS news]
LONDON (ICIS)--European ethyl acetate (etac) prices are moving up at a faster pace in August - up by 5-6% - than during any other month this year, ICIS data showed on Friday.
The price movement is also the sharpest in a relatively stable etac market this year, with a 4-5% price decline from June to July coming second.
Spot deals are trading at €930-960/tonne ($1,163-1,200/tonne) (FD) northwest Europe (NWE), up €50/tonne from €880-910/tonne FD NWE in late July.
The current increase is attributed to a €140/tonne rise in the August feedstock ethylene contract price and a largely bullish sentiment in the feedstock ethanol market abroad, resulting in both local and importing producers pushing for higher prices.
A major northwest European producer utilises ethylene to produce etac, while most importing producers in Brazil, China and India - main sources of European imports - utilise ethanol instead. Ethylene or ethanol is used along with feedstock acetic acid.
Stiff competition between the producers for market share had so far ensured a relatively comfortable position for buyers, but rising feedstock costs both at home and abroad have resulted in a shift in this dynamic.
Moreover, imports have dwindled because of flat European prices and the weak euro to US dollar exchange rate. In addition, a planned maintenance at an Indian producer meant its regular exports to Europe were cut by 60% for June and July shipments as it catered to its domestic buyers.
Etac prices have been mostly stable in 2012 compared with previous years, despite steep price rises and falls in feedstock ethylene.
Prices were unchanged at one point for three months - from March to May - at €950-980/tonne.
Along with the stiff competition, a mostly stable acetic acid spot market and underlying slow demand for etac from the major downstream industrial coatings sector have contributed to the relative stability in the etac market this year.
Chart: Etac prices fairly stable despite steep price movements in ethylene
($1 = €0.80)
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