Europe March VAM rises €120-200/tonne, hits record levels

14 March 2014 23:59 Source:ICIS News

LONDON (ICIS)--European vinyl acetate monomer (VAM) March contract prices were assessed by ICIS on Friday at €985-1,105/tonne, an increase of €120-200/tonne from February, reflecting extremely tight supply and a recent surge in the spot market.

The contract prices were concluded on a free delivered (FD) northwest Europe (NWE) basis.

Spot prices were assessed at €1,650-1,700/tonne FD NWE, up by €400/tonne at the low end and €250/tonne at the high end.

The assessed price ranges for spot and monthly contracts represent record highs for European VAM. Spot prices have increased by €780-800/tonne since 14 February.

The wide range assessed for European contract prices is partly the result of contracts being concluded over the space of a few weeks, during which the market situation changed considerably.

March price increases were mostly heard in the range of €120-200/tonne, although there were exceptions.

A significant proportion of contract business was finalised in the mid-to-high-€1,000s/tonne FD NWE, although outcomes in the high €900s/tonne and low €1,100s/tonne were also heard.

The spot market remained very thin this week. A producer said it had sold 250-300 tonnes at €1,700/tonne FD NWE, having received numerous enquiries from buyers.

A reseller said it had sold spot material for delivery in April at €1,650/tonne FD NWE, but had heard bids as high as €1,900/tonne FD for March delivery. The deals could not be verified with buyers.

LyondellBasell on Thursday declared force majeure on VAM produced at its Texas plant, effective immediately. The declaration resulted from an unplanned mechanical breakdown of a compressor, the producer said in a 13 March letter to customers.

LyondellBasell's letter did not specify the location, but the company's only US VAM plant is its 385,000 tonne/year unit in La Porte, near Houston.

This follows DuPont's declaration of force majeure at its 335,000 tonne/year plant in La Porte last week because of a major outage, with supplies expected to be impacted through the month of June, according to the producer's letter to customers.

In addition, Celanese issued a sales allocation for VAM and acetic acid in a 6 March announcement. Dow Chemical has also had problems at its 365,000 tonne/year Texas City plant.

US VAM export prices jumped by another $100/tonne this week to $1,335-1,435/tonne FOB (free on board).

In Europe, a producer said it had settled its March contracts at increases of €120-200/tonne, although the high end was more of an exception. The source said that the spot market has become almost a "virtual market", with buyers focused on securing enough material to keep their plants running.

Availability should improve slightly next month when vessels start to arrive from Asia, the source observed, but the market will remain short of product for the first half of the year.

One buyer said it had concluded its March contracts at increases exceeding €200/tonne, while another said it had settled at plus €175/tonne at prices in the high €900s/tonne FD NWE. Demand is acceptable and in line with seasonal trends, the source added.

A third buyer said all of its contracts had been agreed in the high €900s/tonne FD.

A buyer based in southern Europe said it had settled its March contracts at increases of €150-200/tonne and its April contracts at a similar increment above the March price level.

Demand is very good, but some traders have avoided building up inventories for fear of a sudden price drop, the source noted.

A consumer said it has concluded its Q1 contract price at €900/tonne FD NWE, representing an increase of €90/tonne from the fourth quarter.

Assessed monthly contract prices have risen by €180-270/tonne since the beginning of the year.

By Samuel Weatherlake