ASC: VAM supply improves, driving prices down

The US vinyl acetate monomer (VAM) spot market has endured some wild swings since the start of 2014. Spot prices peaked in the summer of last year at an average of $1,800/tonne, but have since declined by 44.4%.

Prices have not been this low in nearly two years, since the $980/tonne recorded on 26 November 2013.

However, that was around the time the first of two world-scale VAM plants in Europe were shut down. The European market thus had to look beyond its borders for VAM and the US became a key supplier.

As a result, US spot prices began to increase. Then a spate of planned and unplanned plant turnarounds limited US supplies. These sent prices higher and higher.

From September 2013 to July 2014, VAM spot prices rose by 85.6% and remained at that peak of $1,800/tonne for several weeks.

VAM spot prices did not begin to decline until late October 2014. Since then, US VAM production has risen dramatically, as several plants have resumed full production.

VAM supplies are now readily available. The improved supplies have dramatically pressured the spot market lower and VAM spot prices were assessed lower again in the week of 20 March because of seasonally weak demand and more slippage in feedstock ethylene values.

However, the coming thaw of spring will bring with it renewed demand for VAM, as the US paints and coatings season begins. The VAM buying season will also be underway in Europe, where a pending decision by the EU to eliminate even more import tariffs on VAM supplies will likely dictate the price direction for the global market.