Asia VAM supply to grow in Nov; falling feedstock weighs on market

SINGAPORE (ICIS)–Asia’s vinyl acetate monomer (VAM) supply is expected to grow amid increased production in China, with further market pressure likely to come from falling prices of ethylene and acetic acid.

Port of Haikou on Hainan island, China (Photo by JEROME FAVRE/EPA-EFE/Shutterstock)

Most producers have yet to finalise offers for November shipments but buyers’ sentiment was weighed down by sustained corrections in feedstock prices and amid a slowdown in demand of certain derivatives.

During the week ended 18 October, prices of ethylene-based VAM were stable at $820-950/tonne CFR (cost & freight) NE (northeast) Asia; $860-880/tonne CFR SE (southeast) Asia; and at $880-900/tonne CFR south Asia, ICIS data showed.

A producer is seeking a rollover of $880-900/tonne CFR SE Asia and $900/tonne CFR south Asia for its ethylene-based VAM for November shipments, citing curtailed output in southeast Asia and China, and amid supply shortfalls in Europe due to outages at Celanese’s Clear Lake VAM plant in the US.

Buyers, on the other hand, were insisting on lower numbers citing weakness in feedstock acetic acid and ethylene markets.

On the supply side, a major northeast Asia ethylene-based VAM producer remained in a tight supply position, which is likely to extend up to the end of the year due to ongoing and impending shutdowns at its plants.

In China, which is a key exporter of VAM in Asia, output is set to rise with the restart of one of Beijing Eastern’s two plants on 10 October, after more than a month of shutdown.

During the week ended 18 October, the average VAM plant utilisation rate in China increased to 63% from 60% a month ago.

On the demand side, downstream market performances in Asia are mixed, with polyvinyl alcohol, emulsions and adhesives and fibre sectors languishing amid weak consumption against a backdrop of slowing economic growth in Asia.

China, the world’s second-biggest economy, posted a third-quarter GDP growth of 6.0% year on year, its weakest pace of expansion in nearly 30 years.

Outside China, demand for VAM from downstream ethylene vinyl acetate (EVA) sector in northeast Asia is expected to stay strong on impending completion of plant turnarounds in South Korea.

Market conditions in the EVA market is generally buoyant in northeast Asia.

In southeast Asia, consumption of November VAM shipments may remain downbeat due to reduced downstream production in the EVA and acrylic fibre (AF) sectors.

A major AF plant in southeast Asia is expected to run reduced capacity of 45-50% in October and November, down from 70-80% in September.

Depressed yarn pricing and weaker-than-expected demand in China weighed on market sentiment.

Focus article by Helen Lee