Europe January VAM contract prices rise on multiple drivers

17 January 2014 23:59 Source:ICIS News

LONDON (ICIS)--European vinyl acetate monomer (VAM) January contract prices were assessed by ICIS on Friday at €830-870/tonne, an increase of €25-35/tonne from December.

The contract prices were concluded on a free delivered (FD) northwest Europe (NWE) basis.

The rise reflects the recent loss of 500,000 tonnes/year of domestic VAM production capacity, the 3.5 percentage point rise in EU tariffs for imports from Saudi Arabia, the €15/tonne increase in the January ethylene contract and rising prices for acetic acid.

One producer said it has raised its contract prices by €20/tonne in January, following increases of €30/tonne in December, bringing its prices to €870/tonne FD NWE and above.

The producer noted that the European macroeconomic environment is continuing to improve, which is helping to support downstream applications linked to the construction and automotive industries.

A second producer said its January VAM contracts were finalised at an increase of €25/tonne.

A producer that said last week it had concluded its January contracts at a minimum rise of €30/tonne, with prices falling into the range of €850-870/tonne FD NWE, said it will target February price increases of at least €20/tonne. The source added that it would only offer spot tonnes at €870/tonne FD or above.

One reseller said it has raised its January prices by €30-40/tonne, bringing its prices into the mid-€800s/tonne FD at the low end. The source suggested that strengthening economic indicators could help to boost demand in 2014.

Another reseller said that European consumers are keen to secure tonnes, and are already showing an interest in February deliveries. The source said it expects values to rise sharply to reflect high global VAM prices.

Nearly all buyers indicated January price increases of €20-30/tonne, although two said that they had been able to secure rollovers.

One buyer described good demand for its downstream applications, and said it expects this to continue through the rest of the first quarter. However, an Italian buyer noted that demand in the region is very weak.

A UK buyer said it had seen some erosion in spot price offers this month, although it had not concluded any deals.

Spot prices were assessed on Friday in the range of €830-860/tonne FD NWE, up by €10/tonne at the high end.

By Samuel Weatherlake