Europe AA prices may firm on Asian supply, but not in Q4 - buyers

18 October 2012 16:38  [Source: ICIS news]

LONDON (ICIS)--Buyers in the European acrylates market doubt that any meaningful hikes will be passed for the rest of 2012 as demand is unlikely to support hefty price increases, despite supply shortages in Asia, sources said on Thursday.

Following an explosion at Nippon Shokubai’s Himeji facility in Japan on 29 September, acrylic acid (AA) and acrylate esters market participants are attempting to assess the impact of the outage on availability and pricing in Europe.

Nippon Shokubai’s AA and super absorbent polymer (SAP) facilities in western Japan were shut following the explosion, thus tightening supply in the region. Nippon Shokubai has a total AA capacity of 620,000 tonnes/year, with facilities in Japan, Singapore, Indonesia and the US.

The majority of players agree that there has been little effect in Europe and are adopting a wait-and-see stance. Most buyers and sellers said demand is steady and prices are stable.

Consumers said there is no problem in obtaining their required volumes, given the length in the market, adding that destocking will begin at the end of November.

“We haven’t had any news of difficulties in Europe,” one buyer said. “Producers have enough cargo to cover the low demand and the gap between contract and spot is still wide. I don’t see why producers should claim for higher contract numbers.”

The buyer added that there was not much product going from Europe to Asia.

Asian prices have risen, with some significant price increases seen already for butyl acrylate. Producers there are considering targeting $100-200/tonne (€76-152/tonne) hikes for November acrylates, another source said.

“Seemingly, prices are increasing in China, apparently the only region which is still in a bit of a state of panic after Nippon Shokubai’s problem,” the buyer added.

In the US, a second AA and acrylate esters producer has announced plans to raise November contract prices, leaving some buyers incredulous.

Prices in Europe, however, for now are largely stable. There are some players that expect pricing to firm, although it is not clear whether this will happen next week or as far ahead as the first quarter of 2013.

“Personally, I don’t think prices will increase in Europe,” another buyer said. “The producers will try, but people won’t consume much material in the next few weeks.”

The buyer said that the sector may incur price hikes in the first quarter if supply is still tight in Japan. “If they [Nippon Shokubai] are not back up running by the first quarter, prices will skyrocket. But not in the fourth quarter.”

“Although, I do think it’s quite likely that the facility will be out of action for six months," the buyer added.

Some European sellers, however, point to increased activity, higher prices and say that the market is now changing. There is talk that increases may be targeted in November contract prices on expectations that the market will tighten. There has been a pick-up in demand from the US and Japan, but spot prices are largely mirroring last week's values.

One seller said spot AA is now selling in the high €1,600s/tonne FD (free delivered) NWE (northwest Europe), but there was no confirmation from other sources to support prices at this level. Players said most AA spot business is taking place at €1,550/tonne FD NWE.

The second consumer went on to say that material that had been en route to Europe from Asia at the time of the explosion has now started to arrive. It said: “So much material is here now, so why accept price increases?”

Clearer pricing ideas for November acrylates contracts are expected next week.

($1 = €0.76)

By: Helena Strathearn
+44 208 652 3214

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