21 May 2013 17:42 [Source: ICIS news]
LONDON (ICIS)--The majority of consumers in the European acrylate esters market now expect June demand to be flat with May, and prices to remain largely stable, sources said on Tuesday.
Buyers had initially expected to see a gradual improvement in consumption levels from April, which usually marks the start of the peak season for the coatings industry in Europe, as weather starts to warm.
However, there has so far only been a slight pick up in demand in May from March levels, with some buyers estimating a 10% fall in demand versus May 2012.
“Demand is really unchanged, it is still at the stable level of April,” a buyer said. “It’s healthy, but it is not at the high level expected for May, nor is it where it should be. It is at least 10% down,” it said.
“We are expecting the same for June, but we are not expecting any uplift.” It added: “We had expected to see some growth, but when it didn't come in April, we thought it'd come in May. It hasn’t come in May. We’re seeing good demand but no peak.”
Buying interest has been dampened by concerns surrounding the eurozone debt crisis, and lower-than-usual spring temperatures across Europe.
Acrylate esters are used in the production of paints and coatings. Demand for these materials is heavily dependent on the strength of GDP. EU construction output levels fell by 1.1% in March compared with February. Construction output for the 17-member eurozone was also down by 1.7% month on month in March.
There is talk that propylene prices in June will largely be line with May prices, and acrylate consumers are expecting a similar pricing situation for acrylic acid (AA) and acrylate esters in June.
Another buyer that felt slightly more positive about the outlook for June said: “I expect propylene will do a rollover or slight decrease and that [acrylates] prices will stay on this level or go down a bit. We are hoping it will pick up. It should pick up, the economy is not too bad. Demand last year was about 10% higher.”
A third buyer said: “The market is depressed.” It said it did not expect much improvement for June. “We were optimistic in March, we were optimistic in April. There is no sign of improvement. I expect June to be in line with May demand.”
A trader selling AA and acrylate esters said: “Demand is fair, but nothing to get overly excited about.”
May acrylate esters contract prices came down on the back of lower propylene costs.
($1 = €0.78)
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