Updated to mid-August 2009
Asian market review by Helen Lee, ICIS pricing
Spot vinyl acetate monomer (VAM) prices in northeast Asia (NE Asia) ended the quarter ending mid-August largely flat-to-weak, slipping 0.62% from $780-830/tonne CFR (cost and freight) NE Asia in mid-May, to $770-830/tonne CFR NE Asia in mid-August, led by competitively-priced deep-sea imports into the key China market.
US ethylene feedstock values costing half of that in Asia resulted in arbitrage fixtures of US VAM cargoes into China, priced in the mid-$700s/tonne CFR NE Asia, for June and July arrivals.
Sluggish demand from the downstream emulsions/adhesives, coatings and ethylene vinyl acetate (EVA) sectors exacerbated the slow market, players said.
Although VAM prices in southeast Asia (SE Asia) fared better and ended the same period 3.7% higher at $820-850/tonne CFR SE Asia in mid-August, bearish sentiment had spread to the region by late July amid talk of “dumping” taking place and as key distributors slowed down purchases amid stiff competition.
Saudi International Petrochemical’s (Sipchem) new 330,000 tonne/year VAM unit in Al Jubail, Saudi Arabia, due onstream in the third quarter further contributed to buyer’s caution.
European market review by Jane Massingham, ICIS pricing
Spot prices of VAM were at €570-610/tonne FD (free delivered) NWE (northwest Europe) mid-May and Q2 discussions were still underway.
Initial settlements were either at a rollover, if the buyer was already at the lower end of the Q1 range, or a decrease of €30-50/tonne.
By the end of May, Q2 contracts were settled between €600-700/tonne FD NWE, reflecting a decrease of €50-60/tonne. Within this range there were also those that concluded a rollover, with much depending on the starting point.
Sentiment on the spot market was firmer, with those involved with monthly price discussions announcing plans to increase June prices. Spot markets did firm slightly to €580-630/tonne FD NWE, but the full target of plus €60/tonne was not achieved. The pressure to raise prices was a combination of higher feedstock prices plus some slightly better buying patterns.
Demand was gradually improving month on month, but consumption was still said to be at 70-80% of normal levels, depending on the source.
Early July, Celanese announced it had reached a final agreement with workers about the shutdown at its 150,000 tonne/year VAM and 450,000 tonne/year acetic acid units in Pardies, France. It expects all operations to end at the facility by December.
Another €85/tonne rise in ethylene costs for July saw VAM spot prices rise further to €600-650/tonne FD NWE.
Producers proposed price increases of €50-60/tonne for Q3, but by the second half of July, the few that were able to confirm business, did so with an increase of €20-30/tonne.
Many contractual obligations were still outstanding by mid-August, but fixed priced business was so far pegged between €620-700/tonne FD NWE, while spot numbers were at €620-660/tonne FD NWE.
US market review by Lane Kelley, ICIS pricing
If VAM is the canary in the coal mine of the US and global economy, then the yellow bird still bears more watching. Reflecting the health of the housing industry because homebuyers paint their houses and manufacturers need VAM to put in the paint, this petrochemical seemed to enter a limbo phase during the quarter.
There was no change in US VAM contract or spot FOB (free on board) prices and feedstocks seesawed. Acetic acid prices remained unchanged, while ethylene and natural gas went almost exactly in opposite directions, ethylene rising 10% and natural gas dipping by the same percentage.
If exports are any indication then the canary shows no signs of flying yet.
VAM exports from the US totaled 238,080 tonnes in the first six months this year, down 13% from 274,288 tonnes in the same period of 2008, according to data from the US International Trade Commission (ITC). Most of the decline came in reduced shipments to two countries, Belgium and Germany, which cut their combined VAM imports from the US by 34% to 58,185 tonnes in the first half of this year from 87,983 during the same period of 2008, according to the ITC data.
Vinyl acetate
Uses and Outlook
Most end-use markets for vinyl acetate monomer (VAM) are mature and the growth in the largest applications - adhesives, paints, paper coatings and textiles - expected only to track GDP or slightly below. However, there are strong growth areas for VAM such as ethylene vinyl alcohol (EVOH) barrier resins, ethylene vinyl acetate (EVA) polymers and polyvinyl butyral (PVB).
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