Russia butac producer stops spot supply into northwest Europe

09 November 2012 17:09  [Source: ICIS news]

LONDON (ICIS)--A Russian butyl acetate (butac) producer has stopped supplying the northwest European spot market because of declining prices at the destination, a source at the company said on Friday.

Butac prices fell by €30-40/tonne to €1,040-1,060/tonne FD (free delivered) NWE (northwest Europe) last week. The decline in butac prices is attributed to slow demand from the major downstream  automotive coatings sector in Europe.

The Russian producer was offering butac at €1,040/tonne ($1,333/tonne) DAP (Delivered at Place) Rotterdam last week. Product sold on a DAP basis excludes a 2% duty on Russian product imported into northwest Europe.

"We are supplying only contractual volumes. Prices in the European market are not reasonable. Hearing they would buy at €1,040/tonne DDP [delivered duty paid] but this is too low for us," the source said, adding that feedstock propylene costs have been high this year.

Demand and prices in the northwest European market has been described as a "medium-sized catastrophe" by industry sources based within the region, while a major European producer has been consistent in quoting sales this year as 15% down on 2011.

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.

The slow demand is expected to continue through the fourth quarter as customers buy on a hand to mouth basis on year-end working capital concerns as well.

Oxea, BASF, Celanese and INEOS are the major northwestern European butac producers.

($1 = €0.78)

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

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