28 June 2013 09:54 [Source: ICB]
July contract ideas point to increases as unspecified problems at Ludwigshafen facility in Germany leave traders short
European butyl acrylate (butyl-A) spot prices have risen by €20-70/tonne ($27-93/tonne) the week ended 21 June on supply limitations, sources said. The spot price was at €1,500-1,600/tonne FD (free delivered).
However, it is too early for most players in the acrylate esters market to assess the impact of the force majeure declaration by Germany-based BASF.
On 13 June, BASF declared force majeure on butyl-A production from its 110,000 tonne/year Ludwigshafen facility on unspecifed production problems. A source said on 19 June that its engineers are making good progress.
Traders are selling out on butyl-A for June and are presently largely opting to meet the requirements of their loyal and long-term customers.
A trader said: "Butyl-A June volumes are practically not there."
"It's warming up outside and in the market," another trader said. "It's mainly related to the FM declaration of BASF, plus the sales control at Lucite. Demand has picked up a little bit."
The second trader said it had heard from customers it had not heard from in two to three years. "Already in the afternoon [following the FM declaration] on Thursday and Friday it was hectic and has been until today," it said on 19 June.
It will take a few weeks before Asian and US volumes will arrive in Europe to alleviate the supply constraints.
A few buyers said they had not been affected by the force majeure as they are covered by contract for June and July. "We have our main volumes under contract with other producers and the material that we need to buy as spot is still available," one consumer said.
Prices have been on a general downtrend since November 2012.
"The buyers have had a good run for their money," a producer said. "Demand is increasing, but supply is diminishing."
Initial contract price ideas for July are pointing to increases, based on steady demand and limited butyl-A availability. Sources are closely monitoring price movements in the upstream propylene sector for further indications.
"Customers were getting very comfortable with the level of material in the market up until last week" another trader said. "It is very active now compared with the last few months."
However, another trader said it had hoped for more enquiries. "I've had no desperate phone calls - only two to three enquiries per day, nothing unusual. We still have a couple of hundred tonnes of butyl-A available for June delivery."
A clearer picture is expected to emerge in the next week or two.
DOW JULY TURNAROUND
Dow Chemical will undergo a four-week turnaround at its acrylic acid (AA) plant in Boehlen in Germany from the middle of July which will also affect its butyl-A production. Dow has the capacity to produce 40,000 tonnes/year of butyl-A.
"Everybody will see an impact," another buyer said. "My concerns are for July material. Demand is not there - it is not good. But supply is creating issues."
Another trader said: "There will be an increase, but to what extent? The market is still not good and producers are taking advantage of the situation. Prices will probably increase in early July, but if they are not accepted by the market, prices will drop again."
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