Europe acrylates producers focus on margin recovery

07 March 2013 10:51  [Source: ICIS news]

LONDON (ICIS)--Europe March acrylic acid (AA) and acrylate esters contract prices are largely rolling over or rising on the back of the upstream March propylene increase, as producers remain focused on regaining margin, despite slow demand.

Prices are under upward pressure following the €55/tonne ($71/tonne) March propylene increase.

The majority of March AA contracts have so far rolled over on steady demand, while a few have decreased because of competitively priced imports from China. Although it can take up to two months for material to arrive from China, there are some buyers willing to take the risk of having a longer lead time for lower-priced material.

Acrylate esters contracts, however, have not yet seen any price falls for March.

“We have had a rollover for March from February,” an AA and acrylate esters buyer said, adding that material was easily available.

Demand is stable, but is weaker than expected on the back of dampened consumer confidence, amid economic instability. Offtake typically steps up in early spring, as activity in the construction sector ramps up, but sources said consumption levels might improve in April.

“Demand is not stepping up you'd normally expect at this point,” a producer said.

Trader offers for spot AA are at €1,490-1,570/tonne FD (free delivered) NWE (northwest Europe).

There are still a number of agreements to settle and contract negotiations are likely to continue for another week.

Increases of €20-30/tonne are being agreed, as are hikes of €50/tonne, to represent the upward move in the feedstock propylene market for March. Most February acrylates contracts rolled over.

The producer said the market needs a certain amount of dynamic. “But raw material costs are a very important factor,” it said. “The target is to build back the margin in the product. We certainly can't lose more margin, so we need to take into account the propylene increase.”

($1 = €0.77)

By: Helena Strathearn
+44 208 652 3214

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