Price and market trends: Europe May acrylate esters contract prices fall on lower costs

24 May 2013 09:20  [Source: ICB]

Demand from downstream coatings sector has not picked up thanks to poor weather and weak economy

European May acrylate esters contract prices have fallen by €20-50/tonne ($26-65/tonne) from the previous month on the back of the upstream May propylene price decrease, sources said on 15 May.

 End-use demand remains weak

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Methyl acrylate (methyl-A) prices are at €1,750-1,810/tonne free delivered (FD) northwest Europe (NWE), while ethyl acrylate (ethyl-A) May contract prices are at €1,870-1,890/tonne FD NWE.

May butyl acrylate (butyl-A) contracts are at €1,770-1,800/tonne FD NWE, and 2-ethyl hexyl acrylate (2-EHA) contract prices have settled at €2,050-2,070/tonne.

The May European propylene contract price fell by €80/tonne.

Demand for acrylate esters is lower than normal during May. The lower consumption levels are being attributed to the weak economy and ongoing concerns regarding the eurozone debt crisis. Cold spring temperatures in Europe are also contributing to the lacklustre market sentiment. The derivative coatings sector usually sees demand climb in April and May, but levels have only increased slightly since March, and offtake from the construction sector is slow.

"The coatings season is increasing for sure - maybe not dramatically like in previous years, but it is there," one producer said. "The weather has an impact, but we have got to a stage now where it's possible to do [painting and building outdoors]. We're seeing an increase in demand in ­coatings, but it is not historically what was expected. Construction is still quite difficult."

"What we see is that the market is consistently slow," another producer said. "We see demand from existing customers is lower than usual and lower than expected for the time of year."

Producers were largely able to regain some margin this month. One producer said its margins have been suffering for about ten months because of disappointing demand and high raw material costs. "Demand should be much higher and margins should be higher," it said.

A trader said: "Well, there is some interest but it is an extremely quiet market. [Spot] prices are hanging there, not moving up or down. It's a bit cold and disappointing for the time of year."

However, the trader said demand from the building sector is lower because of the economy, adding: "Maybe people will avoid going on holiday and beautify their homes instead. I don't know what to say."

"Really, it's the economic ­situation," the second producer added. "Everyone is crying but the season is really not starting. It certainly has to do with the weather. The weather has been bad. "There is rain and grey and temperatures of 10-15 degrees Celsius in many places. That is not helping, it's just slow, slow, slow. If demand doesn't pick up by early June then we won't have 'a season'. It's unbelievable what's happening."

Acrylic acid (AA) and its esters are used in the manufacture of various plastics, coatings, adhesives and elastomers, as well as floor polishes and paints.

Europe May acrylic acid contracts settle down on lower propylene costs
European May acrylic acid (AA) contract prices fell by €40/tonne ($52/tonne) from the previous month, on lower feedstock propylene costs, sources said on 15 May.

Producers said they were largely able to regain some margin this month. The upstream May propylene contract price decreased by €80/tonne, and exerted downward price pressure on the AA sector.

"If you compare the decreases in relation to propylene, I think we have increased our prices a bit," one ­producer said. "But it is certainly not enough for the market, nor is it to the level that we need as far as we are concerned."

The producer said its margins had been suffering for about ten months because of lacklustre demand and high raw material costs.

May contracts in the AA sector are at €1,810-1,830/tonne FD (free delivered) NWE (northwest Europe). Decreases were heard higher and lower, depending on source. Spot prices are at €1,500-1,550/tonne FD NWE, having fallen by €20/tonne since April contracts settled. While the downstream acrylate esters sector has seen disappointing demand for the time of year because of poor macroeconomic conditions, AA offtake from the water treatment and super absorbent polymer (SAP) industries remains steady, amid healthy availability.

The largest use of SAP is in personal disposable hygiene products.

"Areas like water treatment are consistent and in general the ­demand is arriving. Demand for SAP is stable," one producer said.

Players said it remains to be seen whether there will be any impact on European supply or pricing, following the force majeure announcement at BASF PETRONAS Chemicals last week. The manufacturer declared force ­majeure on its oxo-alcohol, AA and acrylate esters plants at Gebeng Industrial Zone in Kuantan, Pahang, Malaysia, on 9 May, ­because of a lack of feedstock ­propylene supply.

By: Helena Strathearn
+44 208 652 3214

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