Price and market trends: Stable-to-firm outlook for the Europe acrylates sector - sources

17 March 2014 00:00 Source:ICIS Chemical Business

The low end of the European butyl acrylate (butyl-A) spot range edged up on slightly firmer market conditions this week, and with March acrylate esters contract discussions now underway, there is talk that butyl-A contract prices will be under upward pressure.

Demand for butyl-A is up from February, and the market is not as long as it has been in recent months.

The spot range saw a €20/tonne hike on the low end of the range to €1,470-1,500/tonne FD (free delivered) NWE (northwest Europe).

EU Ethyl Acrelate

Following the settlements of the February and March feedstock propylene contracts at a rollover, amid largely stable supply/demand fundamentals, market participants’ initial expectations are that most prices in the acrylates sector will not see much change from February levels, although there are some players that believe butyl-A and perhaps acrylic acid (AA) will see a gentle increase. AA and acrylate esters producers are looking to increase prices to regain margin.

Margins have been squeezed since the second quarter of 2013, and a few sources this week reiterated that current levels are unsustainable.

“We’ve been losing so much margin in the last few months - it’s really time to recover. So we’re trying to get increases,” a producer said.

However, buyers continue to resist price rises, as they say demand has not picked up sufficiently.

Negotiations are expected to run for another couple of weeks.

Demand is gradually improving as spring draws closer, and there are signs that the peak coatings season is slowly starting, or at least will have done so by the end of March.

There are a couple of sources that suspect there might not be the typical rise in offtake in April that is usually seen at the beginning of the coatings season because buyers have been pre-empting demand improvement since the end of January.

There is more confidence in the industry than there was in the first quarter of 2013. Some buyers are able to provide month-long requirements rather than purchasing on a hand-to-mouth basis, as was the case in March last year.

Weather conditions too are so far better for the paint and coatings sector than they were a year ago.

Nevertheless, there is still uncertainty in the market and inventory levels are being carefully monitored as players are reluctant to build stocks.

February butyl-A contract prices are at €1,910-1,930/tonne FD NWE. The European propylene contract price for March was agreed at €1,130/tonne.

By Helena Strathearn