FocusProposed US acrylates hikes fight against stable feedstock

19 October 2012 19:41  [Source: ICIS news]

US acrylates proposed higherBy Larry Terry

HOUSTON (ICIS)--Two US acrylates producers are attempting to increase prices despite stable feedstock costs and the absence of a major producer from the initiative, sources said.

November price-increase efforts of 6-8 cents/lb ($132-176/tonne, €102-136/tonne) have been more difficult than usual for buyers to tolerate, given prevailing soft acrylates market conditions.

The proposed 8-cent/lb increases cover Arkema's 2-ethylhexyl acrylate (2-EHA) and methyl acrylate (methyl-A).

Current US acrylic acid contract prices are $1.09-1.13/lb, as assessed by ICIS after rolling over from September, the third flat settlement in as many months.

Most buyers do not seem to argue with the idea of sellers recouping input costs, but primary feedstock chemical-grade propylene (CGP) has moved negligibly during the past several months.

Although CGP fell sharply in May and June, it has been all but stable in recent months, settling flat for July, falling by 1.50 cents/lb for August and rising by just 1.00 cent/lb for September.

Only two producers, Dow Chemical and Arkema, have announced plans to boost acrylates prices, effective on 1 November, or as contracts allow. And only one of those sellers has offered a reason for its increase initiative.

“Raw material prices, specifically propylene, have increased and are projected to be volatile over the upcoming months,” Dow said in a 15 October price letter to customers announcing its planned 7 cent/lb hikes.

The rationale of “expected volatility in raw material prices” has been derided by some buyers, with one calling it ridiculous.

Buyers are adamant that November price-hike efforts should fail and they are hopeful they will fail, especially given the absence of acrylates initiatives from BASF.

All of the producers have been reticent, but most buyers said BASF is not expected to pursue November price increases.

Two buyers suggested producers are responding to - or taking advantage of - supply concerns stemming from the acrylic acid unit explosion at Nippon Shokubai’s complex in Himeji, Japan, at the end of September.

The site’s acrylic acid plant, which has a nameplate production capacity of 380,000 tonnes/year, was one of several operations taken down at the site.

The duration of shutdowns there is not known, but no US sources yet anticipate domestic supply constraints.

Further, any acrylates price gains would be predicated solely on propylene, a buyer said.

“I don't see any of the price initiatives being implemented with contract customers,” a buyer said. “Propylene only moved up by 1.50 cents/lb in October, and I am expecting my contract suppliers to move up by only 80-90% of that.”

($1 = €0.77)

By: Larry Terry
1 713 525 2653

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