Low August demand masks European acrylate esters supply constraints

Author: Katherine Sale


LONDON (ICIS)--Seasonally low August demand is masking the supply constraints in the European acrylate esters market, linked to critically low water levels on the Rhine and upstream production problems.

- 2-EHA spot prices at three-year high

- Supply concerns for September once demand picks up

- INEOS oxo-alcohols force majeure lifted, but its effects may linger

Supply for 2-ethylhexyl acrylate (2-EHA) ester has tightened in recent months, with spot prices currently at a three-year high.

2-EHA prices increased sharply in October 2016, in the aftermath of the BASF explosion at Ludwigshafen.

Prices have kept rising since then, with continued talk in the market that there remains unresolved production hiccups at the BASF facility since the explosion.

There remains no confirmation from the producer on this.

There have been fresh production issues since May this year, tightening supply further.

Upstream issues intensified production problems for 2-EHA, with INEOS declaring force majeure at Lavera on its oxo-alcohols in June.

The force majeure was lifted at the end of July, but there are concerns that this has reduced feed for esterification, with inventories impacted going into September.

With demand currently at a deflated level because of the traditional August lull, the full extent of the supply constraints is yet to be seen.

Although there is upward pressure in the market, spot prices remain stable, with very little business taking place as European players step away for the holiday period.

Arkema is set to shut down its acrylate esters and acrylic acid (AA) facilities at Carling, France, for one month. The units have a production capacity of 270,000 tonnes/year of AA.

The producer has prepared inventory for stoppage, although numerous feedstock outages have complicated this task at times.

Contract talks for August continue, following the minor increase in the upstream propylene contract.

Rollovers and very minor increases have been agreed so far, with butyl acrylate (butyl-A) supply easing slightly this week, and supply for other esters balanced.

Players are already thinking about September pricing, with continued tightness and fresh production problems upstream resulting in upward pressure for the month.

The impact of the low water levels on the Rhine is yet to fully emerge, but could put additional pressure on trucking logistics if barge transport remains limited.

The summer lull in August continues, with many European players’ focus currently away from the market.

However, if production and logistical issues and soaring temperatures continue, players may return to a rather tight and troublesome time.

Pictured: An archive image of the River Rhine in 2003, when a drought affected the area; water levels this year are also at critical levels
Source: Action Press/REX/Shutterstock

Focus article by Katherine Sale