European VAM contract price cuts draw to a halt

Source: ICIS News

2019/03/15

LONDON (ICIS)--The long slide in European vinyl acetate monomer (VAM) prices appears to have run its course, according to information from sources in the market.

The contract value for March has  been assessed at the same level as in February, marking the first time in eight months that the number has not declined.

In some cases, a slight softening was seen, but not on a sufficiently wide scale or to such an extent, as to affect the overall valuation. On the other hand, separate attempts by some sellers to raise prices this month proved to be largely unsuccessful, or perhaps premature.

There appears to be two principal reasons for the halt in the steady price erosion seen over the last seven to eight months. Firstly, some plant turnarounds outside of Europe are expected to constrain supply in the near term – if not enough to render the market tight.

Secondly, this development will take place in the context of a market in which participants recognise that any further reduction in prices would be unsustainable - after falling so far and for so long from a peak in the middle of 2018. As a result, questions about viable margins have begun to feature for the first time in a long while.

Producers have separately said that they will look for a price increase in April. One buyer said it had already accepted a small increment next month, although it is likely that producers will generally push for a more substantial hike, especially given the probability of improving demand as the spring will usher in the paintings and coatings season.

VAM contract prices have been assessed at €1,030-1,045/tonne FD, before any discounts, which are common and can be substantial in this market.