Price and market trends: Latin America VAM prices poised to rise

29 November 2013 09:36 Source:ICIS Chemical Business

The planned closure of two vinyl acetate monomer plants in Europe is expected to tighten supply in Latin America

Much higher spot prices for Latin American buyers of US vinyl acetate monomer (VAM) are coming early next year and maybe sooner, buyers said on 18 November.

US VAM FOB export prices rose slightly the prior week, by $10/tonne (€8/tonne) to $930-$1,030/tonne, on rising ethylene prices.

But buyers on the sidelines of the 33rd Latin American Petrochemical Association (APLA) annual meeting in Cartagena, Colombia, said their expectations come not from rising raw material costs but from the announced closing of two European VAM plants.

One Latin American buyer predicted higher prices – by as much as $50/tonne higher – in early 2014 because of the planned closure of VAM plants in the UK and Spain by INEOS and Celanese, respectively.

“The mess is going to be in January,” the buyer said.

Another Latin American buyer said there will be increases sooner than January – before the end of November.

“We will not enter any business under $950/tonne,” the buyer said. That fits within the current US FOB export range, though it would raise the bottom of the range.

VAM buyers disagreed as to the low end of the spot range, but they agreed on why prices must go up – tightening of the VAM supply in Europe will require more imports from the US, which also exports to Latin America.

Negotiations are under way for European November vinyl acetate monomer (VAM) contract prices, but expectations are mixed because of the announced closures of two major European plants, a global buyer said.

“It should be around €820/tonne, but because of the speculation around the two plant closures, producer offers are at €850-870/tonne FD [free delivered] NWE [northwest Europe],” she said on the sidelines of the APLA meeting.

“Producers are asking for a €30-50/tonne increase, but the demand is not there. Spot prices in October were at €790/tonne FD,” she added.

The closure announcements that are impacting on the negotiations are the INEOS 300,000 tonne/year VAM plant at Hull in eastern England, and the Celanese 200,000 tonne/year VAM plant in Tarragona, Spain.

US-based chemicals producer Celanese said on 4 November that will launch a consultation on the potential closure of the VAM facility in Spain after failing to find a buyer for the site.

Additional reporting by Barbara Ortner in Cartagena

By Lane Kelley