Minimal August price hikes achieved for Europe butac

16 August 2013 17:47  [Source: ICIS news]

LONDON (ICIS)--European butyl acetate (butac) producers seeking to increase prices in August on the back of feedstock propylene price increases have failed to achieve the full targeted price hikes, sources said on Friday.

Butac producers had been targeting August price hikes of €30-60/tonne ($40-80/tonne) following the August contract price settlement of feedstock propylene at an increase of €50/tonne from July, but most achieved only a fraction of that, sources said.

“On the upper side we managed to increase by €30/tonne,” a producer said.  “On the lower side I see some tendency for prices to move. I hope we can increase a bit more. It's not sufficient to compensate for [damage to] margins.”

With margins already compressed because of high feedstock costs, producers were extremely keen to increase August butac prices to prevent further margin erosion.

However, with the holiday season under way, demand subdued, and some participants speaking of an oversupply, market conditions do not support anything more than a minimal increase.

“I've not heard anybody trying to achieve more than a €20/increase,” a buyer said. “We accepted €20/tonne [increase] from one party.”

According to two distributors, producers achieved increases of €10-15/tonne, while a third said producers were not able to increase prices at all because of poor demand.

Producers are expected to target further butac price increases in September, when the holiday season is over and business has properly resumed.

Furthermore, a planned turnaround at BASF's oxo-alcohols unit in Ludwigshafen, Germany, from mid-August to mid-September might also tighten the market, a source said last week.

Market tightness could support a price hike, depending on the level of demand at the time.

($1 = €0.75)

By: Jo Pitches
+44 208 652 3214

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