Price and market trends: US VAM prices shoot up on supply issues, Dow proposal

17 March 2014 00:00 Source:ICIS Chemical Business

US vinyl acetate monomer export prices jumped by another $100/tonne on a force majeure declared by DuPont, a sales allocation by another producer and other plant issues, sources said on 10 March.

The latest jump puts VAM at $1,335-1,435/tonne FOB (free on board), the fourth increase in a little over a month and the second $100/tonne hike in a week. The hike puts VAM FOB prices up by 33% so far this year.

The rise marks what one producer described as an extraordinary time because of plant outages and turnarounds.

Another producer said assessing prices in the usually staid VAM market could become 
anybody’s guess during the next few weeks.

US VAM

The latest boost in VAM came from DuPont and Celanese. On 5 March, DuPont declared force majeure through June on material made at its 335,000 tonne/year LaPorte, Texas, unit because of a plant outage there.

“At this time, the supply of our vinyl acetate monomer product is expected to be impacted through the month of June,” Michael Hillary, olefins and VAM commercial director, said in a letter to customers.

Shutting down the 335,000 tonne/year VAM unit for four months, or a third of the year, will mean lost production of about 111,667 tonnes for DuPont at the site.

Two days later Celanese issued a sales allocation on VAM and acetic acid as part of a 4 cent/lb price increase on those products for April.

The notice gave no reason for the hike, but market sources said Celanese had plant issues at its 300,000 tonnes/year Bay City, Texas VAM unit.

Celanese’s other unit, the 310,000 tonne/year plant in Clear Lake, Texas, was said to be operating at normal levels by market sources.

All five of the US VAM plants are in or near the Houston area. But the wildest price swings have been noted by sources in South America and Europe, which depend heavily on American-made material.

GLOBAL SUPPLY

South American sources the week ended 7 March provided a wide range of FOB estimates, ranging from a low of $1,100 tonne to nearly $1,600/tonne on the high side.

Latin American sources predicted a VAM price war was coming late last year when two plants in Europe were shuttered. Both regions depended on exports before the plant closings and even more so now.

In Europe, spot VAM prices soared the week ended 7 March to record-high levels of €1,250-1,450/tonne, which converts to $1,736/tonne on the low end, because of a severe lack of product.

Another big factor came on the last day of February, when Dow Chemical announced an 18 cent/lb price increase, citing increasing demand and higher raw material costs.

A source close to the company said the global supply-demand balance had tightened so much on VAM that Dow could not take spot orders at its 365,000 tonne/year Texas City plant. The source said Dow could only serve contract customers at present.

By Lane Kelley