Supply crunch to bolster Asia's EVA market amid stable demand

Author: Helen Lee

2019/09/05

SINGAPORE (ICIS)--Asia’s ethylene vinyl acetate (EVA) market may remain bolstered in the near term as the impact of tightened supply continues to bite, while stable demand prevails.

(Source: Photo by Xinhua/Shutterstock)

The market is facing a supply crunch because of production swings, as well as ongoing and upcoming plant turnarounds.

Prices of the 14-20% and 22-30% vinyl acetate (VA) content grades in China led the increases to $1,370-1,480/tonne cost and freight (CFR) China and at $1,530-1,560/tonne CFR NE (northeast) Asia during the week ended 3 September, due to more acute supply shortages.

This came after several producers in China and South Korea prioritized production of grades with 28-33% VA content in the third quarter amid improved demand from the downstream photovoltaic (PV) industry since July.

The production ratio at LG Chem’s 140,000 tonne/year plant in Daesan since the week ended 30 August has been focused on the PV grade EVA with 28% VA content, rather than on the hotmelt adhesive grade. The production campaign was expected to continue until mid September.

Meanwhile, a southeast Asia-based producer was not in a position to offer the 28-33% VA content grades for hotmelt adhesives and PV applications until October, after having pre-sold most of its September cargoes in July and early August.

Buyers of the 14-20% VA content for foaming applications were braced for higher prices to prevail into the end of the month, amid reduced supply in the domestic market as local producers focus on the higher yielding grades.

A key supplier of Taiwan origin 14-20% VA content EVA had implemented sales controls since August due to its plant turnaround.

Buyers of the 28% VA content grade in China for hotmelt adhesives production encountered dwindling offer options, as the supply of deep-sea origin cargoes dried up on the back of upstream issues in that region.

Converters of the 28-33% VA content grades in China, on the other hand, are still facing cash flow issues from customers in the downstream solar panel industry, in addition to the depreciation of the yuan versus US dollar rendering imported EVA feedstock costlier.

Over in India, the market was fueled by buyers emerging to replenish inventories on the back of decreased cargo arrivals in July and August.

Prices of the 14-20% VA content EVA for foaming applications were subsequently bolstered at three-month highs of $1,500-1550/tonne CFR India on a zero import duty basis during the week ended 3 September, ICIS data showed.

ICIS Editorial Chart goes here

EVA with 14-20% VA content is used in the foaming/footwear industry. EVA with 22-30% VA content is used in the wire and cables industry, as well as the hotmelt adhesives industry whereas EVA with 28-33% VA content is used in the PV/solar panel industry.

Feedstock costs - EVA northeast Asia

ICIS Editorial Chart goes here

The EVA price premium over feedstock costs in northeast Asia increased as feedstock cost hikes abated.

Focus article by Helen Lee