Chemical profile: Asia VAM

13 December 2013 15:04 Source:ICIS Chemical Business

Vinyl acetate monomer (VAM) is a chemical building block used in a wide variety of industrial and consumer products. VAM is a key ingredient in emulsion polymers, resins, and intermediates used in paints, adhesives, coatings, textiles, wire and cable polyethylene (PE) compounds, laminated safety glass, packaging, automotive plastic fuel tanks and acrylic fibres. It is also used in furniture glue and chewing gum.

Most end-use markets for VAM are mature and the growth in the largest applications – adhesives, paints, paper coatings and textiles – are expected only to track or be slightly below GDP. However, there are strong growth areas for VAM such as ethylene vinyl alcohol (EVOH) barrier resins, ethylene vinyl acetate (EVA) polymers and polyvinyl butyral (PVB).

Asia’s supply outstripped demand growth in 2013 – estimated at an average of 4% – as a new 350,000 tonne/year VAM plant in southeast Asia came onstream in mid May.

Weaker than anticipated economic growth in India coupled with low downstream offtake in China offset feedstock driven price increases in Asia. Average VAM plant utilisation rates in Asia, including China, consequently varied at 60-80%.

Asia’s VAM supply and demand is expected to be more balanced in 2014, supported by a combination of VAM plant closures in Europe and Japan, as well as growing demand from the downstream ethylene vinyl acetate (EVA) sector in northeast Asia.

VAM export availability from South Korea is expected to be curtailed in 2014 whereas in Japan, the average operating rates at local VAM plants may be poised to increase as one of the local producers Denki Kagaku Kogyo (Denka) exits the business in the second quarter of 2014.

Denka will cease production at its sole 60,000 tonne/year VAM plant at Ichihara, Chiba, at the end of April 2014, and end all its VAM sales by the end of June 2014.

Asia VAM spot prices were largely trading sideways for the most part of the year as supply had outstripped demand on the start up of new VAM plants in Singapore.

Taiwan’s Dairen Chemical started commercial production at its new 350,000 tonne/year VAM plant on Jurong Island, Singapore, in mid-May 2013.

In the fourth quarter of 2013, however, escalating upstream methanol and acetic acid values and steady-to-firm ethylene feedstock costs prompted major VAM producers to eye a $20-50/tonne hike on December shipments.

However, largely unchanged demand and supply fundamentals continued to offset producers’ attempts to raise prices. VAM prices were steady in most parts of Asia with the exception of China where prices rose $5-10/tonne at $920-935/tonne CFR China Main Port (CMP) in late November.

Major producers targeted a further $50-100/tonne increase for January 2014 shipments in a bid to claw back margins, which remained in negative territory.

Acetylene-based technology was used first in the commercial production of VAM with the gas phase process preferred to the liquid phase reaction. Ethylene has now become the preferred feedstock with the gas phase route used due to problems of corrosion and by-product formation when using the liquid phase process. This is why ethylene figures so prominently in contract formulas.

Acetic acid is catalysed in the gas-phase reaction with ethylene and oxygen in a fixed bed tubular reactor at 175-200˚C (347-392˚F) and 5-9 bar pressure. The VAM is then recovered by condensation and scrubbing, and is purified by distillation.

UK-based BP developed Leap, a fluidised bed technology that is said to cut investment costs by 30%. Essentially, the chemistry is the same as the existing technology.

Celanese’s VAntage process is said to increase production efficiency and lower operating costs. The technology is said to add production capacity equivalent to a world-scale plant at 10-15% of the cost of building a grassroots unit. Praxair received a patent for a technique using 99.95% oxygen to reduce catalyst losses and undesirable reaction by-products, while boosting yields by up to 5%.

The closure of VAM plants in Europe and Japan by Celanese, INEOS and Denka is widely expected to provide a boost in prices in the first and second quarters of 2014.

Europe is expected to attract Middle East VAM cargoes, leaving southeast Asia and India to absorb the new capacity in Singapore.

On the demand side, southeast Asian downstream emulsions producers are ­hopeful of better capacity utilisation rates in 2014.

By Helen Lee