VAM

10 December 2001 00:00 [Source: ICB]

Europe was the strongest market in early 2001. Now, like the US and Asia, it is suffering from long supply and reduced demand

Uses

Polyvinyl acetate accounts for about 48% of vinyl acetate monomer (VAM) use, with applications including water-based paints, adhesives, acrylic fibres, paper-coatings or non-woven binders. Polyvinyl alcohol (PVOH), used in packaging film and glass laminates, accounts for about 35% of demand. The remainder goes into ethylene vinyl acetate (EVA) polymers and ethylene vinyl alcohol (EVOH) barrier resins.

Supply/demand

World demand was 4.11m tonne last year against capacity of about 4.7m tonne, according to Tecnon OrbiChem. The US is the world's largest exporter and Asia is the biggest importer, followed by Europe. Global markets are depressed with weak demand and excess availability, and are expected to be down by up to 15% on 2000, although slightly less in Europe which had a stronger first half of the year. Producers have cut output, and operating rates worldwide are now about 85%, says Tecnon OrbiChem. In the UK, BP is commissioning its new unit in Hull, and once fully operational, the Baglan Bay plant will close. EniChem closed, in June, the 55 000 tonne/year plant in Porto Marghera, Italy, which supplied BP. Celanese will shut its Canadian unit early next year. Taiwan's Dairen has commissioned its new plant in Mailiao: its former 120 000 tonne/year unit is being converted to 1,4-butanediol. Acetex entered a tolling agreement with Dairen mid-year, and product normally destined for Asia will now remain in Europe.

Pricing

European contract prices have dropped by E50-70/tonne in quarter four. The October range was E780-800/tonne, but lower prices were reported at E680-750/tonne in December. High raw material costs in quarter three eroded margins, but quarter four has seen some relief with the reduction in ethylene and methanol prices, although margins remain thin.

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Technology

Ethylene has become the preferred feedstock, largely replacing the earlier acetylene-based process. Vapourised acetic acid and ethylene are reacted with oxygen in a fixed bed reactor using a supported noble metal catalyst. VAM is recovered by condensation and scrubbing and purified by distillation. In BP's Leap fluidised bed technology, the catalyst is continuously removed and replenished giving the process much longer run times and is said to cut investment costs by 30%. Praxair has patented the use of 99.95% oxygen to lower the amount of inerts in the reactor and boost yields by up to 5%. Eastman Chemical has developed a three-step liquid phase process based solely on acetic acid to make VAM in yields as high as 95%. Celanese says its new VAntage technology increases efficiency and lowers operating costs, and can increase capacity by 10-15% at minimal cost.

Health and safety

VAM is a colourless, volatile, flammable liquid. It is a dangerous fire and explosion hazard and flashback can occur. The vapour irritates the eyes, skin and respiratory tract and high concentrations cause dizziness and drowsiness. Contact with the liquid will defat the skin causing blisters.

Outlook

Any improvement in demand is not expected until the second half of 2002. Most end-uses are mature and long-term demand growth is forecast at GDP rates of 2-3%/year. The strongest growth areas are EVOH and polyvinyl butyral (PVB). EVOH is a small volume product, but is estimated by SRI Consultancy to grow by 10-15%/year to 2004 in western Europe, US and Japan. PVB has potential in Europe as a replacement for tempered glass. Saudi International Petrochemical plans a 275 000 tonne/year plant in Al Jubail, Saudi Arabia, using DuPont technology which is due to start up in late 2003. Celanese will install its VAntage technology at all of its plants as 'market demand' dictates.

GLOBAL VAM CAPACITY, '000 TONNE/YEAR

Company	Location	Capacity
Europe
Acetex	Pardies, France	150
Achema Ionava
	Ionava, Lithuania	20
BP	Baglan Bay, UK	115*
	Hull, UK	250
Celanese	Frankfurt, Germany	220
	Tarragona, Spain	110
Doljchim	Craiova, Romania	20
JSC Nevinnomyssky
	Novomoskovs, Russia	22
Severdonetsk Orgsyntez
	Donetsk, Ukraine	30
Stavrolen	Budyennovsk, Russia	50
Wacker	Burghausen, Germany	100
Yerevanskiy Zavo
	Yerevan, Armenia	50
Americas
Celanese	Bay City, Texas, US	290
	Clear Lake, Texas, US	265
	Edmonton, Canada	85**
	La Cangrejera, Mexico	110
CAN	Cabo, Brazil	80
DuPont	LaPorte, Texas, US	275
Millennium	LaPorte, Texas, US	365
Union Carbide	Texas City, Texas, US	365
Asia/Middle East
NPC	Arak, Iran	30
Asian Acetyls	Ulsan, South Korea	150
Beijing Organic
	Beijing, China	90
Celanese	Pulau Sakra,
	Singapore	190
Dairen	Mailiao, Taiwan	240
Denka	Ichihara, Japan	60
Kuraray	Okayama, Japan	150
Nippon Gohsei
	Mizushima, Japan	156
Shanghai Petrochemical
Jinshan, China	102
Shanxi Sanwei
	Hongdong, China	65
Shin-Etsu	Sakai, Japan	80
Showa Denko	Oita, Japan	120
Sichuan Vinylon
	Chongqing, China	95
VAM Organic	Moradabad, India	20
	Nira, India	15
Vinyl Chemicals
	Mahad, India	15

* to shut early 2002
** to close Q1 2002
Source: SRI International/ECn

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