OUTLOOK ’15: Butac, etac likely to remain soft

HOUSTON (ICIS)–In the US ethyl acetate (etac) market, the first quarter of 2015 is likely to bring slowness, with a potential for some softening of prices, sources have said.

The etac market ended 2014 soft, with a slight price decline. Some of that was because of normal seasonal slowness in demand. However, sources also indicated that falling crude prices globally prompted many buyers to wait on the sidelines before purchasing more material. Although the direct feedstock for etac – acetic acid – has been stable, market sentiment is that the global crude markets are impacting etac.

Also possibly impacting the market in early 2015 is the ending of the partnership agreement between Eastman Chemical and Celanese that ran a plant that produced etac. That agreement came to an end at the end of 2014, and both companies will return to producing and distributing their own material. That could increase capacity in the market.

In the butyl acetate (butac) market, things will be driven by propylene, of which butac is a derivative. At the end of 2014, demand for butac remained stable, but, falling propylene prices pushed butac prices down.

Sources in the butac markets don’t think that butac will see large price decreases in the first quarter of 2015, largely because supply and demand appears balanced.

Furthermore, the first quarter is the ramp-up to the spring coatings season, when butac tends to be in high demand. Butac is used in high-end paints and coatings, and is driven by the automotive and construction sectors.

The spring home buying season could stabilize the butac market, and strong auto sales could also keep it stable as well.

Still, butac buyers and sellers will keep an eye on the price of propylene going forward.