Price and market trends: Europe VAM contracts settling higher

21 April 2014 00:00 Source:ICIS Chemical Business

The bulk of April vinyl acetate monomer (VAM) contracts in Europe have now been concluded, sellers said on 4 April, with price outcomes heard at a very wide range.

Prices have been indicated in the mid-€1,200s/tonne free delivered (FD) northwest Europe (NWE) at the low end and the mid-€1,600s/tonne FD NWE at the high end, although the latter has yet to be confirmed directly with participating buyers.

Supply remains very tight in Europe, but the arrival of volumes from Asia has been reflected in lower spot prices this week. While a modest increase in availability may be seen in April, sources do not expect to see any major improvement over the next few weeks.

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Paint manufacturers are considering alternatives to high priced VAM

March contract prices were assessed by ICIS at €985-1,105/tonne FD NWE. Spot prices were assessed the week ended 4 April in the range of €1,400-1,720/tonne FD NWE, down by €100-120/tonne.

A producer said it had concluded its April contracts in the high-€1,200s/tonne to mid-€1,600s/tonne FD NWE, although it emphasised that prices above €1,400/tonne were applicable only to smaller consumers.

It wanted to avoid major demand destruction in the European market, and suggested that availability would not improve significantly until the third quarter, when planned turnarounds in the US will be over, and more Asian material will be present, the source said.

ALTERNATIVES CONSIDERED

The producer acknowledged that buyers in some sectors will consider switching to alternative products, but said that not all consumers have this flexibility.

A producer of n-butanol (NBA) said it is seeing additional demand for NBA from paint manufacturers as they seek more competitively priced alternatives to VAM.

A second VAM producer reiterated that its April contracts, half of which have been agreed, fall within a range of €1,400-1,450/tonne FD NWE, representing increases of about €400/tonne from March.

A third producer said that all of its April contracts have been concluded at €1,580-1,650/tonne FD NWE. Numerous iso-tanks are arriving from Asia, and this seems to have reduced interest in spot tonnes, the seller noted.

No spot deals were heard done in Asia for shipment to Europe the week ended 4 April, although VAM was offered at $2,000/tonne FOB (free on board) southeast Asia, $1,700/tonne FOB northeast Asia and $1,400/tonne FOB China.

A buyer said it had concluded an April contract at around €1,250/tonne FD NWE, up by €250/tonne from March. The source acknowledged that further increases could be seen in May, but noted that product is arriving from Asia.

A second buyer said it had settled its April contracts at €1,400/tonne FD NWE, but had heard that other buyers were finalising their contracts at €1,500-1,600/tonne FD. The source said its demand has been sharply reduced owing to cost pressures.

EU VAM

A third buyer said it had agreed some April contract prices in the €1,200s/tonne FD.

A fourth buyer said one contractual supplier is targeting increases of €300-350/tonne for April, while another is targeting increases of about €200/tonne.

The source said it is aiming for a price level of around €1,300/tonne FD, but emphasised that prices at this level are impossible to work with. The market will remain tight throughout the second quarter, the buyer acknowledged.

A fifth consumer said it had been offered a price of €1,350/tonne FD for April.

SPOT PRICES MODERATE

Turning to the spot market, prices have moderated somewhat in response to the arrival of Asian imports. One buyer said that a vessel had arrived the week ended 4 April and will be followed by two more shortly. The market remains very tight, the source said, and suggested that consumers may switch to alternative feedstocks.

The source said it had bought tonnes for April delivery at about €1,550/tonne FD the prior week, and had been offered material in the high-€1,400s/tonne FD for May delivery the week ended 4 April. The buyer added that it has been able to secure feedstock-linked contractual material for April at a price below €1,000/tonne FD.

A second buyer said it had bought VAM at around €1,500/tonne FD for April delivery and €1,400/tonne FD for May delivery, indicating a falling trend.

A third spot buyer said it had been offered tonnes at €1,400-1,590/tonne FD for April delivery. A fourth buyer indicated prices at €1,400-1,500/tonne FD, but felt that prices would decline in May.

A fifth buyer said it had bought tonnes towards the lower end of the prior week’s range. A sixth buyer said there is strong resistance to higher prices and availability has improved.

One re-seller said it had sold tonnes on the spot market at €1,680/tonne FD the week ended 4 April. Chinese iso-tanks are priced in the €1,400s/tonne FD, the source said, but the numbers arriving are likely to fall. A second re-seller indicated spot prices at €1,600-1,720/tonne FD.

By Samuel Weatherlake