Europe VAM spot prices rise €30-100/tonne on supply constraints

21 February 2014 23:59 Source:ICIS News

LONDON (ICIS)--European vinyl acetate monomer (VAM) spot prices are rising rapidly in response to supply constraints, market sources said on Friday.

Spot prices were assessed by ICIS at €900-1,000/tonne FD (free delivered) NWE (northwest Europe), up by €30-100/tonne. The range was widened to represent the breadth of price ideas in the market this week. 

In addition to turnarounds at US plants, sources attributed the lack of supply to earlier production problems at Sipchem's plants in Saudi Arabia.

A southeast Asia-based producer was heard to have sold a 10,000 tonne VAM cargo for loading in March at $1,280-1,300/tonne CFR (cost and freight) Europe. 

Another producer said it has begun its March contract negotiations, and is targeting prices in the mid-€1,000s/tonne FD NWE, which would represent increases of up to €200/tonne from February.

Availability is limited, the source said, in large part owing to production problems in the US, and not all requests from buyers can be met. The seller added that it had heard spot prices in eastern Europe had already reached €1,000/tonne FD.

A third producer described a very tight market in Europe, and noted that some of its February prices had been settled above €1,000/tonne FD.

One reseller said that product is difficult to obtain, and it will have to sell the tonnes it has purchased at €1,100/tonne FCA (free carrier) or more in order to realise a profit.

Fresh imports will not be available until the end of March, the reseller said, adding that it doubts whether much material can now be obtained for less than €1,000/tonne FCA.

A second reseller offered a less bullish view of the market, saying that demand is steady and it has concluded trades at €900-940/tonne FD.

“Everybody still very jumpy on availability and this pushes pricing further up,” the source said.

A reseller based in eastern Europe said early in the week that it had not yet seen prices in the region above €835-850/tonne FD, while it was selling tonnes into northwest Europe at €830-870/tonne FD. 

A third reseller said that there is little material available in Turkey, where prices have almost reached $1,200/tonne CIF (cost, insurance and freight).

Consumers were taken aback by the sudden price rises, but acknowledged that they are unavoidable.

One said it had purchased a modest amount on the spot market at a price close to €1,020/tonne FD for March delivery. Spot prices are being discussed at €1,000-1,100/tonne FD for March, the source said, and it was finding it difficult to cover its full requirements for next month.

Another buyer said it had agreed to some spot deals for small volumes this week at €950/tonne FCA for delivery at the end of February, having concluded some deals earlier in the month at €880-920/tonne FCA.

A third buyer said it was aware of prices around €1,000/tonne FD, which would be an increase of €200/tonne and hard to accept. However, a fourth buyer said that prices are still around €900/tonne FD.

A UK buyer emphasised that there would come a point at which it would struggle to afford VAM, given that it is difficult to pass large increases downstream.

A buyer in eastern Europe said its February prices were close to €900/tonne FD for material of Russian origin.

February contract prices were assessed by ICIS at €865-905/tonne FD NWE, an increase of €35/tonne from January.
By Samuel Weatherlake