Europe VAM market players worried about weak end-user demand

08 March 2013 15:04  [Source: ICIS news]

LONDON (ICIS)--Sources in the European vinyl acetate monomer (VAM) market expressed concern on Friday that demand for downstream products remains poor at a time when VAM consumption should be entering its peak season.

Market participants attributed the lack of end-user demand to weak macroeconomic conditions in Europe, which is undermining activity across a range of sectors.

The construction industry is one of those most severely affected by the downturn, and this in turn means lower requirements for adhesives, paints and coatings, which represent a major outlet for VAM.

Cost factors represent another source of concern, with the price of ethylene (the principal feedstock for VAM) having risen by €50/tonne ($66/tonne) for March.

One reseller was worried that suppliers might start diverting VAM away from Europe to regions in which demand is stronger, while domestic producers might opt to reduce their operating rates.

A buyer said that demand was much lower than it was at this time in 2012, but noted that the coatings season should start in April.

Two other buyers said they were concerned about the lack of demand, which they said was unusual for the time of year.

A fourth buyer took an entirely different view, saying that its demand was at a high level.

“Certainly the emulsions are not doing that great,” was the view of one producer, who added: “The first half [of the year] I think you can forget about, but there may be some positivism in the second half.”

Another producer said it was not seeing any fall in end-user demand and was moving plenty of tonnes.

The European VAM market has been well-supplied over the past few months; even a 40-day unplanned outage at INEOS’s 300,000 tonne/year plant in Hull, UK, from late December had only a modest impact on the market.

($1 = €0.76)

By: Samuel Weatherlake
+44 20 8652 3214

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