US Sept acrylates may roll over, soft market to persist

14 September 2012 17:49  [Source: ICIS news]

US Sept acrylates may roll over, soft market to persistHOUSTON (ICIS)--If US acrylic acid and acrylate esters contract prices settle flat for September – and all signs point to that – it will be the second straight rollover in as many months, and it will probably set the tone for the rest of year, sources said on Friday.

"Coatings season is over,” a producer said. “It’s going to be like this for the rest of the year.”

Demand is soft, supply is ample, and US Gulf export prices have been flat to softening in recent weeks.

The US August glacial acrylic acid contract price range is $1.09-1.13/lb ($2,403-2,491/tonne, €1,850-1,918/tonne), as assessed by ICIS.

Acrylates values are typically tied closely to the movement of its primary feedstock, chemical-grade propylene (CGP), so any gains in the September propylene contract could give importers and domestic producers some argument for small acrylates increases, which would provide some relief from margin compression.

But other factors that tend to support price gains are absent or having no effect.

Even brief shutdowns ahead of Hurricane Isaac and a planned outage underway at importer Sasol’s acrylic acid plant in South Africa have had little or no effect.

A Sasol source said its catalyst change at the plant will not affect the global supply chain if completed within its scheduled 40-day run. The source added that some customers may be only peripherally aware that any maintenance is even occurring.

Some price concessions for September did surface, but a producer said its reduction was limited to select buyers and was an effort to bring those customers’ prices into parity with the bulk of the domestic market. However, most customers said no price movement for September would occur.

“A lot of accounts we’ve rolled over,” the seller said, “but we made some concessions with customers in cases where we were higher than our competitors. Before, when supply was a little tight, we didn’t feel the need to match our pricing.

“Of course, some of the formal accounts will see declines because of August propylene,” the seller added.

Although August propylene decreased by 1.50 cents/lb, it was deemed too small to move most freely negotiated September acrylates contracts down. If September propylene contracts rise by 2-3 cents/lb, it will likely push October acrylates up – but only marginally.

But though producers are fairly resolute, buyers have some leverage in lacklustre conditions. A buyer that achieved some minimal September acrylates concessions said any negotiated price reduction these days “depends on how strongly you ask”.

US acrylates producers include Dow Chemical, Arkema and BASF.

($1 = €0.77)

For more on acrylic acid, visit the ICIS Plants & Projects database

By: Larry Terry
1 713 525 2653

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