Price and market trends: US VAM prices surge again on 2nd force majeure

28 March 2014 09:45 Source:ICIS Chemical Business

Prices surge $215/tonne as LyondellBasell declares FM and other two producers disclose supply issues

US vinyl acetate monomer (VAM) soared $215/tonne during the past week on a second force majeure, turning export prices into somewhat of a guessing game, sources said on 18 March.

ICIS assessed the VAM FOB (free on board) export range at $1,500-1700/tonne, near the middle of estimates by sources.

Export prices have shot up 54% since early January, with most of that jump in the past four weeks.

Since late February, outages have prompted two of the four American producers to declare force majeure – the latest being LyondellBasell – while two other producers have revealed plant or supply issues.

“It’s mainly just notional pricing now,” a seller said, “for those who have material.”

A major ingredient in paints and coatings, US VAM export prices in 2013 moved up about $100/tonne. But in just a few weeks’ time this year, the likelihood that prices will soon double has become not only possible but probable.

International VAM
It has already happened in Europe, which has prompted some of the price mania in recent weeks because of recent plant closures in the UK and on the continent.

European VAM spot prices the week ended 14 March reached more than $2,300/tonne, which is more than double the January range that averaged $1,123/tonne.

Europe needs US VAM, as does South America, as both regions are net importers.

Late last year, South American sources worried about the possibility of a bidding war breaking out with Europe over prices for US VAM.

The highest price estimates the week of 17 March have come from South American sources, who heard talk of export prices from Houston ranging from $1,750/tonne to nearly $2,000/tonne.

A buyer in Brazil said that it was now time to switch from VAM to styrene acrylics on some products.

“This is crazy. We are stopping purchasing VAM in some countries already,” the buyer said. “We will not buy based on speculation and opportunistic behavior.”

A seller said this kind of price mania tends to happen every three to four years in the VAM market. The last time it happened, in 2011, spot prices climbed over $2,000/tonne before retreating.

By Lane Kelley