05 June 2013 20:34 [Source: ICIS news]
LONDON (ICIS)--June contract prices in the European acrylic acid (AA) and acrylate esters markets are likely to face upward price pressure on the back of firmer feedstock propylene pricing and steady demand, sources said on Wednesday.
While some sellers expect the bullish feel in the market to result in increases, others said it would result in some prices rolling over rather than decreasing.
May AA contract prices fell by €40/tonne ($53/tonne) from April on lower propylene costs.
A few buyers are still aiming for lower prices on sporadic demand in an uncertain economic climate, although most said a rollover would be a reasonable outcome.
One buyer expecting a rollover said prices may have reached the bottom as the outlook for June is steady and because the propylene price for this month went up by €15/tonne.
“We think we have more or less reached the bottom for contract pricing,” it said. “We are expecting a rollover and no increase, because there is no shortage of material and because [feedstock] oxo alcohols prices have been dropping in recent weeks.”
Margins along the supply chain have been squeezed because of high costs and slow demand from the beginning of the year and into early spring.
The buyer added that production might be cut to control volume in what it described as a balanced-to-long market. “If the volume is really too high for today's market demand, they might cut production. There is no argument for an increase.”
Demand is stable with May’s levels and the outlook for June remains steady, with orders coming in from the coatings sector.
One producer said: “Demand remains good, as it was in May, and it is not down on last year’s levels. The coatings season is certainly happening and demand is increasing.”
It said it was also seeing promising demand from outside of Europe.
The producer added: “After the C3 settlement, the market has the momentum to accept some price increases.”
AA is a key intermediate chemical used in the production of acrylic esters and resins. Ethyl acrylate, butyl acrylate, methyl acrylate, and 2-ethylhexyl acrylate are polymerised to become ingredients in paints, coatings, textiles, adhesives, polishes and plastics.
($1 = €0.76)
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