Focus article by Jo Pitches
LONDON (ICIS)--Prices in the European butyl acetate (butac) market this year have been too low for Russian producers to do much business in the region, sources said on Friday.
“Prices are too low in northwest Europe [for us to do business],” one butac producer said. “If prices get higher we might come back to Europe, but we need at least €100/tonne higher.”
A second Russian butac producer is doing limited business with northwest Europe, but is not willing to be flexible with its prices, even though demand for butac is poor and customers are seeking lower prices.
“Customers want [price] decreases, but if we cannot get what we want, we sell elesewhere”, this producer said. “[We want to achieve] €1,030/tonne without delivery and duty [costs], or we won't sell. It’s not worth it.”
While the producer is dependent on exporting volumes, better prices can be obtained from other regions, the source said.
“Our production is bigger than what the Russian market can take,” the producer said. “If we don't succceed with [price levels in] Europe, we'll sell elsewhere... [in terms of prices] everywhere is better [than Europe].”
A Russian producer of etac and butac explained last week that, due to robust competition in the European market, and the large number of other importers, it is focusing on selling to its own region this year.
“We are really focused on the local market of Russia and CIS,” this source said. “You are right, the NWE [northwest Europe] market is not looking so interesting for Russian acetate producers as some years earlier. That’s why they try to export to other directions, for example to Turkey.”
The third producer added that while the weak rouble supports Russian exports, it is not sufficient to compensate for the strong competition and relatively low prices in Europe.
“Our raw material suppliers are trying to raise domestic prices in accordance with the currency exchange rate,” the source added.
European butac prices have been stable since early January because of flat business.
Looking ahead, participants foresee few changes on the horizon for the European market, despite a €10/tonne increase in the April contact price for feedstock propylene.
A European butac producer said: “We'll try to increase [butac] prices by €10/tonne for April, but we'll see. Demand is nothing great.”
The second Russian producer said: “[business is] very, very slow. It’s much worse than it would usually be at this time of year. We keep hearing that the economy is better, [so] I have no explanation for this trend [of poor European demand for butac].