26 October 2012 09:03 [Source: ICB]
There is unusually heightened contention over monthly contract price initiatives within the US acrylic acid and acrylate esters market, sources said.
Buyer and sellers' interests are always at odds, of course, but November price-increase efforts of 6-8 cents/lb ($132-176/tonne, €100-134/tonne) have been more difficult than usual for buyers to tolerate, given prevailing soft acrylates market conditions.
Current US acrylic acid contract prices are $1.09-1.13/lb after rolling over from September, the third flat settlement in as many months.
Most buyers do not seem to argue the idea of sellers recouping input costs, but primary feedstock chemical-grade propylene (CGP) has moved negligibly during the past quarter and beyond.
Although CGP fell sharply in May and June, it has been all but stable in recent months, settling flat for July, softening by 1.50 cents/lb for August and moving up by just 1.00 cent/lb for September.
Only two producers, Dow Chemical and Arkema, have announced plans to boost acrylates values, effective 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 are hopeful, especially given the absence of acrylates initiatives from producer BASF.
Producers have been reticent, but most buyers said BASF is unlikely to seek November 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 the shutdowns 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."
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