26 July 2013 17:13 [Source: ICIS news]
LONDON (ICIS)--An expected increase in the August propylene contract price means that butyl acetate producers are facing pressure to increase August prices to try to avoid further damage to margins, they said on Friday.
A producer said: “The rumour in the market is that if raw material prices increase, the market has to follow. Butac prices are on the low side, a €50-100/tonne [expected] increase [of August propylene], this is a lot. The butac price has to move. We have to increase, we should try to increase by a minimum €50/tonne.”
A second producer said: “Most likely we'll see a price increase for propylene, maybe even a bigger increase. The cost will increase for us. At the moment when I look at margins, it is so bad [that] we cannot accept a further cost increase [without increasing butac prices]. An increase [of butac prices] is definitely something we can guarantee now.”
“A [butac price] rise is necessary to restore margins,” a third producer said, adding that it is not currently able to earn more by selling greater volumes.
However, the success of any attempted August butac price hike remains to be seen.
Distributors speak of flat demand. The traditional summer slowdown is now underway, with participants taking holidays and many European factories poised to close for part of August.
This will further suppress demand that is already suffering because of adverse macroeconomic conditons impacting the downstream automotive and construction industries.
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