Weakening Europe automobile industry puts pressure on butac

02 November 2012 13:56  [Source: ICIS news]

LONDON (ICIS)--A European butyl acetate (butac) distributor on Friday described the market as a "medium-sized catastrophe", after a major producer last week quoted sales this year as 15% down on 2011.

The decline in demand is attributed to the poor performance of the car industry, as automotive coatings is a major downstream market for butac in Europe. 

The average European butac price of €1,105/tonne FD NWE in the peak summer coatings season in June 2012 was 21% lower than at the same time last year because of the slow demand. Butac was selling at €1,390/tonne in June 2011.

A major European producer has been consistent in describing its 2012 butac sales as 15% lower year on year, adding that this trend is expected to continue through the fourth quarter.

Last week, the producer reiterated: "There is a 15% year-on-year decline in demand for solvents in 2012, because automotive coatings is the biggest application [for the sector]."

Butac prices fell by €30-40/tonne to €1,040-1,060/tonne FD NWE this week as the mood of the market became even more subdued after fresh economic data came in last week from the European Automobile Manufacturers’ Association (ACEA).

The data revealed a downward trend in new passenger car registrations in the EU. From January to September, demand for commercial vehicles fell by 10.7%, according to ACEA.

"All major markets recorded negative figures: -3.1% in the UK, -4.2% in Germany, -7.7% in France, -25.7% in Spain [and] -34.6% in Italy," ACEA said. Italy's Fiat had been talking about closing one of its Italian plants as a result of the heavy slump in car sales in the country.

In addition, automobile manufacturer Ford Motor Company recently announced that it will cease vehicle production in Genk, Belgium, by the end of 2014.

"Butac is a medium-sized catastrophe," said a butac distributor. "Butac uptake is heavily influenced by the automotive industry.

"We have recently heard bad news from Ford, Fiat, France's PSA. French car companies have big problems. Germany is talking about Bochum, one of the historical sites of Opel in Germany. We are talking about quite big numbers," the distributor added. "This already gives you the feeeling the impact is quite harsh and deep. This is suddenly reflecting in car painting production and butac is a complete disaster. Price levels are under pressure."

($1 = €0.77)

By: Cuckoo James
+44 (0) 208 652 3214

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