25 January 2013 10:38 [Source: ICB]
Demand was expected to increase in January on re-stocking activity, however this has not been the case this year
Market players are not buying, despite the upcoming holiday
The acrylic acid and acrylate esters market outlook remains clouded also because new start-ups and capacity expansions in China alone will add about 220,000 tonne/year of butyl acrylate (butyl-A) this year amid weak demand, they added.
Prices of butyl-A fell by $50/tonne week on week at the low end to $1,900-2,000/tonne (€1,425-1,500/tonne) CIF (cost, insurance & freight) SE (southeast) Asia on an iso-container basis on 16 January, according to ICIS data.
RISE AND FALL
Acrylic acid and acrylate esters prices rose in October 2012, following the explosion at Nippon Shokubai's Himeji facility, which caused a scramble for cargoes in the Chinese markets, pushing up prices.
However, towards the end of the year, domestic Chinese prices fell, while import spot prices in Asia remained steady.
The market outlook remains uncertain, especially following such volatility in prices in the market, a China-based player said.
In addition, the majority of market players remain cautious on the back of sellers cutting offer prices to entice buying interest, she added.
"End-users are basically just purchasing on a need-to basis, with demand at low levels despite the approach of the Chinese Lunar New Year holiday," a southeast Asia-based player said.
Demand was expected to increase in January on re-stocking activity, as end-users tend to build up inventories in anticipation of the holiday.
However, this has not been the case this year.
Several sellers have cut offer prices for January from December prices, but this has not attracted much buying interest as end users have cited weak prevailing downstream demand on poor global macroeconomics and were unwilling to accept high prices, according to market players.
"Downstream demand off-take is slow in the paint sector, and is expected to be worse in February as the majority of our customers will be away for almost a week because of the holiday," a southeast Asia-based end-user said.
The Lunar New Year holidays fall on 9-15 February this year.
In addition, exported cargoes for butyl-A from China were heard to be offered into the Asia region at competitive prices, adding downward pressure on regional sellers' offers.
"[Butyl-A] offers were heard at $1,800-1,900/tonne FOB (free onboard) China, and this is adding pressure to our prices," a southeast Asia-based seller said.
With squeezed margins, weak demand and buyers unwilling to accept higher prices, feedstock propylene is still firm and production costs are increasing, a northeast Asia-based seller said.
According to several market participants, availability of glacial acrylic acid (GAA) is expected to be limited, especially following the start up at Formosa Plastics Corp's (FPC's) new superabsorbent polymer (SAP) plant.
GAA is used as a feedstock for the production of SAP.
"Stock from sellers for GAA is rather tight, but this is against very weak demand, so a chance of an uptrend is very unlikely unless there's a sudden panic to scramble for cargoes," a Chinese distributor said.
There is basically a stand-still in the acrylic acid and acrylate esters market amid an uncertain outlook, with market players being very cautious, said market players.
"Unless there's a shake up in the Chinese markets again, prices are likely to remain stable-to-soft," a trader said referring to a situation if demand drastically improves overnight.
In addition, new start-ups in China are also adding onto an already unclear market outlook, said several market participants.
Jiangsu Sanmu Group is expected to start its new 60,000 tonne/year butyl-A plant located at Yixing, Jiangsu province in March 2013.
Similarly, Handsome Jiangmen is expected to start up its new 80,000 tonne/year butyl-A unit in end March.
Qilu Petrochemical Kaitai Industry is expected to start up its new 80,000 tonne/year butyl-A unit and an 80,000 tonne/year crude acrylic acid (AA) plant in September-October this year.
According to several market players, BASF-YPC and FPC are likely to expand capacities at their butyl-A facility, while Jiangsu Jurong and Zhejiang Weixing are expected to increase capacities for crude AA.
Saudi Arabia's Tasnee Sahara Olefins Co (TSOC) expects to bring its 160,000 tonne/year butyl-A plant in Al Jubail on stream in June.
Meanwhile, Saudi Acrylic Polymers Co (SAPCO) expects to start up an 80,000 tonne/year SAP plant in Al-Jubail, Saudi Arabia, in September.
The price trend for the acrylic acid and acrylate esters market for 2013 remains unclear, another southeast Asia-based trader said.
"We've just got to take a step at a time," he added.
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