Dow raising VAM prices $200/tonne globally on demand jump from FM

18 August 2014 23:11 Source:ICIS News

Dow raising VAM prices $200/tonne globally on demand jump from FMHOUSTON (ICIS)--Dow Chemical issued its second largest vinyl acetate monomer (VAM) price increase of the year on Monday, raising prices by $200/tonne around the world, citing increased demand from its force majeure in the US.

The producer issued a VAM increase that was twice as large in late February.

Dow sent a letter to customers dated today saying that it was raising list and off-list prices on VAM by 9 cents/lb or $200/tonne in Latin America, India/Middle East/Africa and Asia Pacific, and by €150/tonne in Europe.

The letter referred to the force majeure, stating that the producer "is experiencing increasing demand for VAM and our inventory levels continue to be depleted as we continue to manage through our Force Majeure in the US. These conditions have made it necessary for Dow to increase its prices to continue to manage the high current demand."

If accepted by customers, the increase would push US VAM spot prices above $2,000/tonne, doubling prices this year. Spot prices have remained at $1,700-1,900/tonne since mid-July. VAM spot prices began the year around $1,000/tonne.

A VAM seller said he previously thought prices might tail off in the fall but that now he thinks there will be no decline before early 2015.

"Probably now it's January," the seller said. He added that material has become so tight that allocations have been computed "down to the pound" through the end of the year.

VAM is an adhesive used in car windshields and also a major ingredient in architectural paints and coatings.

US VAM supply has tightened considerably in 2014 because of plant closures in Europe in late 2013 and unplanned US outages this year.

Buyers in Latin America and Europe have been caught in a price war because they depend even more on US material now than before the plant closures in Europe. Some South American buyers have begun buying cheaper material from Asia.

Three of the four US producers - Dow, LyondellBasell and Kuraray - remain under force majeure. Celanese is the only US producer that has not declared force majeure this year.

There has been talk that Dow would lift its declaration later this month or in September and that the other producers would follow soon.

Dow declared force majeure at its 365,000 tonne/year VAM plant in Texas City on 25 June when a tube leak in a reactor was discovered.

LyondellBasell and DuPont declared force majeure at their US VAM plants in March. DuPont has since sold its VAM plant and business to Kuraray.

By Lane Kelley