US VAM Q4 contracts, spot prices rise on ethylene, supply issues

07 January 2014 23:05 Source:ICIS News

US VAM Q4 contracts, spot prices rise on ethylene, supply issuesHOUSTON (ICIS)--US vinyl acetate monomer (VAM) fourth-quarter contracts rose by 1-2 cents/lb ($22-44/tonne, €16-32/tonne) on the settlement of key feedstock ethylene this week and on supply issues in Europe, sources said on Tuesday.

The increase brought the Q4 contract price to 57-62 cents/lb from 56-60 cents/lb.

US VAM export prices also increased by $35/tonne FOB (free on board), driven by the same issues. Spot prices rose to $990-$1,090/tonne from $955-1,055 previously.

Rising raw materials played a part in pushing VAM values higher. Ethylene, methanol and natural gas, which are variables in many contract formulas, have all seen increases in the past quarter. Methanol is a major feedstock for acetic acid, which is a raw material used in VAM.

However, the big driver in rising VAM prices came from supply tightness brought about by plant closures in Europe late last year that have made the Continent more dependent on US exports.

“Europe is driving all of this increase,” a supplier said, adding that US-made material also is crucial to South America. “There’s been no increase in demand, it’s just a matter of how exports are priced.”

US December ethylene contracts increased by 2 cents/lb on Monday and played a major role in the VAM increase, based on formulas tied to the feedstock. Ethylene accounts for about 37% of the VAM price.

VAM quarterly contracts historically have settled at the end of the period, following settlement of the latest ethylene monthly contract. US ethylene contracts usually settle at the start of the month for the previous month.

Producer nominations for January called for increases of 2.5-3.0 cents/lb. Suppliers did not all agree on the success so far. Only one said all of the proposed increase had been agreed to by buyers.

Major VAM producers include Celanese, Dow Chemical, DuPont and LyondellBasell.

($1 = €0.73)

By Lane Kelley