Reaction to US Oct acrylates initiatives mixed

HOUSTON (ICIS)–News that the major US acrylates producers had separately announced October price-hike initiatives was no surprise, sources said on Tuesday, but the magnitude of some of the proposals was.

Arkema announced on Tuesday that it will seek increases of 6-8 cents/lb ($132-176/tonne) for its acrylates, effective 1 October.

Arkema’s price letter seeks 6 cent/lb increases for its glacial acrylic acid (GAA), methyl acrylate (methyl-A) and ethyl acrylate (ethyl-A), a gain of 7 cents/lb for its butyl acrylate (butyl-A) and an increase of 8 cents/lb for its 2-ethylhexyl acrylate (2-EHA).

“I’m surprised by the magnitude of the (Arkema 2-EHA) increase,” a buyer said. “Even if September propylene goes up by 6 cents/lb, I don’t see how Arkema expects to get more than the feedstock cost increase in this market.”

Buyers felt similarly about the other increase efforts.

BASF also announced on Tuesday its plan to increase October acrylates prices by 5 cents/lb, each, except for 2-EHA, which it proposed higher by 6 cents/lb.

A day earlier, Dow Chemical separately announced in a letter to customers its intent to raise acrylates prices by 6 cents/lb, also effective 1 October.

None of the announcements cited reasons for the proposed increases, but September propylene has been proposed higher by 7 cents/lb and 8 cents/lb.

Several market sources have suggested those propylene initiatives may eventually weaken to a potential increase of 4-5 cents/lb as propylene supply constraints begin to ease.

September propylene talks could extend through the end of the month, an olefins source said, because propylene buyers are highly unlikely to accept the initial increases proposals.

In the meantime, September acrylates free-market contract prices were still being negotiated.

Pushback has been evident, and one buyer insisted that any tightness that came with improved spring and summer demand this year has dissipated.

September acrylates were separately proposed 5 cents/lb higher by each of the major US suppliers.

While buyers have readily acknowledged pressure on September acrylates from August propylene, a couple of customers said earlier this month that they had settled some of this month’s acrylates contracts higher at about half of the proposed increase amounts.

A producer this week would not say how much of its September initiatives were being achieved, but asserted that it has “been more disciplined about pushing price increases through.”

A large buyer said at least 2-3 cents/lb would stick, and perhaps all 5 cents/lb.

Producers acknowledged pushback, but each said its individual price-hike efforts were going well, adding that operating margins have been thin for most of the year.

August free-market contract values rolled over in August, holding GAA values, for example, in a range of 78-82 cents/lb FD (free delivered), as assessed by ICIS.

Acrylates are commonly used to make products including paint and coatings, plastics and construction and pressure-sensitive adhesives.

Focus article by Larry Terry

INSET IMAGE: Monkey Business Images/REX/Shutterstock