Europe Feb acrylates to roll over or rise on margin recovery

12 February 2013 12:50  [Source: ICIS news]

EuroLONDON (ICIS)--Most European February acrylic acid (AA) and acrylate esters contracts are so far rolling over and increasing slightly, largely in an attempt to restore margins, sources said on Tuesday.

European buyers said that, based on current consumption levels, there are few changes to February acrylate esters contract prices compared with January - although they might move up later in the quarter. A few commented that there would not be a big adjustment until March or April, when the coatings season picks up. One buyer added that the market is balanced to long. “It is not tight at all,” it said.

Consumption levels have moved up since the beginning of the year and are likely to improve in the coming months, but visibility is still poor.

“We are seeing signs of recovery. Demand will grow further for the season,” a buyer said. Consumers are now preparing for the building season, but remain concerned that demand is thin, amid an uncertain outlook.

Producers are keen to regain margins lost in 2012, but the market is not yet fully accepting price hikes. This is particularly the case with butyl acrylate (butyl-A), where prices are predominantly rolling over on ample availability.

One producer said: “There is every need to increase the margins on the products after the demise during last year.”

More ambitious pricing targets have been difficult to achieve, but players expect prices to increase further in March. “We are getting some increases,” another producer said. “With esters, we are being more aggressive. Increases have been difficult to achieve in the current environment, but we are getting decent increases in some places.”

The producer explained that price hikes are being targeted because of higher US prices and margin recovery. “It is the low price level in the market, as well as the expensive raw material increases in Europe, that are forcing us to try to get some improvement on margins. We cannot keep the lag on the increase on our AA and esters prices while we get the increases on the raw materials and suffer with poor margins.”

Negotiations are ongoing.

By: Helena Strathearn
+44 208 652 3214

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