Europe acrylate players expect stable-to-firm April prices

11 April 2014 15:59 Source:ICIS News

LONDON (ICIS)--It remains unclear which direction European April acrylic acid (AA) and acrylate esters contract prices will settle, but with negotiations set to conclude next week, players on Friday said a rollover to a small increase is likely.

Following the April feedstock propylene contract price rise of €10/tonne, producers are targeting price hikes to regain margin as the market enters what is typically the peak demand season.

A few factors are prompting producers to target hikes: The feedstock propylene contract price for April was agreed up by €10/tonne; margins have been unsustainably low since last year; and demand is steady, with some expectation that it will firm in May after the Easter holidays.

A buyer said: “Demand is fine, but margins for producers less so.”

While there is no disputing that production margins remain squeezed, buyers said demand levels in the balanced market would not allow for April price hikes of more than the propylene increase. Some consumers said they would accept no more than a rollover this month.

Despite this resistance, producers are standing firm in their intention to move prices up in line with the raw material price hike.

As Easter holidays approach, one buyer that is still negotiating its prices said: “It looks promising for a period where there are holidays.” It expects a rollover this month and a potential price rise in May. “There are no [demand] peaks now.”

Owing to high vinyl acetate monomer (VAM) prices, some butyl acrylate suppliers are seeing increased demand from customers that are moving away from VAM in favour of styrene-acrylics or pure acrylics. The buyer said it was potentially good for the varnish and lacquer sectors where VAM is seen as a substitute.

One trader said its volumes are significantly higher than last year, estimating them at around 25% higher.

“There is nothing exciting going on but volumes are moving quite nicely. The volumes are strong because several customers are changing their formulation to move away from VAM and make styrene-acrylics or pure acrylics instead,” it said.

March AA contract prices were stable to firm.

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By Helena Strathearn