Updated to mid-November 2009
Asian market review by Helen Lee, ICIS pricing
Spot vinyl acetate monomer (VAM) prices in northeast Asia (NE Asia) and southeast Asia (SE Asia) ended the quarter to mid-November largely flat at around $800/tonne CFR (cost and freight) NE Asia, and around $840/tonne CFR SE Asia respectively, despite firming ethylene feedstock values.
Prices were capped by the supply overhang of VAM in the key China market following an influx of competitively-priced deep-sea cargoes during the third quarter. Meanwhile, stiff competition among VAM suppliers in southeast Asia and sluggish demand from the downstream emulsions/adhesives and coatings sectors likewise depressed buying impetus in that region, hindering producers’ price increase initiatives.
The start-up of commercial production at Saudi International Petrochemical’s (Sipchem) new 330,000 tonne/year VAM unit in Al Jubail, Saudi Arabia, in the last quarter further contributed to a stable-to-weak pricing outlook, as buyers procured on a need-to basis. End-users were also expected to pare down inventories for December, further challenging producers’ resolve to raise prices.
European market review by Jane Massingham, ICIS pricing
Spot prices of VAM were at €620-669/tonne FD (free delivered) NWE (northwest Europe) mid-August and Q3 talks had reached a stalemate scenario in the height of the summer season.
The quarterly business that had been agreed was heard from producers with an increase of €35-40/tonne and from buyer’s €20-30/tonne higher. The fixed priced agreements were pegged between €620-700/tonne FD NWE.
With ethylene settling €80/tonne higher for September, VAM producers spoke of increases for monthly and spot business of between €50-66/tonne in order to recover costs. Buyers understood the cost pressure, but also noted that demand may not be sufficient to absorb such an increase.
Moving into September, Q3 contracts were settled at €620-700/tonne FD NWE, reflecting a rise of €20/tonne at the low side. Spot prices also firmed slightly at the low end to €630-660/tone FD NWE.
A declaration of force majeure from Celanese for its acetic acid volumes in Asia for September led some to feel that there were restrictions in the VAM market. While there was less spot material on offer, all customers were able to cover requirements.
Towards mid-September, spot prices firmed another €20-30/tonne to €650-690/tonne FD NWE.
In October, INEOS shut down its 250,000 tonnes/year unit in Hull, UK, for planned two months maintenance.
Producers announced intentions to target increases of €100/tonne for Q4; buyers reacted with resistance and said a rise of €50/tonne was more realistic, especially with a shift in the direction of ethylene and the level of demand.
By mid-October, spot prices reached €690-730/tonne FD NWE, but this was where they peaked before easing back to €680-710/tonne FD NWE early November.
Discussions for Q4 were still ongoing at press time. Confirmation of quarterly agreements was heard with an increase of between €40-60/tonne or on a fixed price in a wide range of €650-750/tonne FD NWE.
US market review by Lane Kelley, ICIS pricing
The VAM market reflects the health of the US housing industry, because homebuyers want to paint their houses and manufacturers need VAM in the paint. Despite indications during the period that housing would recover in 2010, a more near-term recovery for the market was considered a big question mark.
VAM exports have tailed off consistently this year, with plentiful supplies of material available. Expectations that sales in the US paints and coatings industry will decline for the rest of the year have sparked talk of rollovers or declines in VAM year-end pricing in spite of run ups in ethylene and natural gas prices.
A LyondellBasell executive provided one bright spot in the VAM market recently, saying the company wanted to expand VAM sales in Brazil because the other producer there had cut back production.
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Vinyl acetate
Uses and Outlook
Most end-use markets for vinyl acetate monomer (VAM) are mature and the growth in the largest applications - adhesives, paints, paper coatings and textiles - expected only to track GDP or slightly below. However, there are strong growth areas for VAM such as ethylene vinyl alcohol (EVOH) barrier resins, ethylene vinyl acetate (EVA) polymers and polyvinyl butyral (PVB).
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Vinyl acetate
Process Technologies
Acetylene-based technology was used first in the commercial production of VAM with the gas phase process preferred to the liquid phase reaction. Ethylene has now become the preferred feedstock with the gas phase route used due problems of corrosion and byproduct formation when using the liquid phase process.
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