Price and market trends: Europe etac prices hit highest level since Nov ‘11 on shortages

08 May 2014 17:28 Source:ICIS Chemical Business

European etac prices were last at this level in November 2011 after a European producer declared force majeure

Spot prices for European ethyl acetate have reached their highest level since November 2011, ICIS data showed on 25 April

Spot prices for etac were assessed notionally at an average price of €1,000/tonne FD (free delivered) NWE (northwest Europe).

Prices have been driven upwards during the last few weeks on a combination of fewer imports entering Europe and reduced availability of European spot volumes.

The former resulted from the increase in European import duty which came into effect on 1 January.

Higher costs of selling to Europe, combined with relatively low European etac prices at the time, meant a number of importers from the countries affected – including Saudi Arabia and India – instead chose to sell to regions where higher prices could be achieved.

Regarding shortages of European spot volumes, having restarted production on the weekend of 12-13 April, one producer is in the process of rebuilding stocks.

However, it is carefully managing its spot sales and prices.

Supply shortage
Furthermore, an Indian vessel of etac that was originally due to arrive in Europe in April has been delayed until late May because of congestion in ports in both India and Antwerp, sources said.

With customers having scrambled for material, fewer and fewer suppliers now have volumes to sell.

“I have spot volumes to sell,” a distributor of Indian etac said. “Whatever price I give someone, they take it, within reason. I think the spot market is dry. Usually you have 10 people offering in the spot market, now [there are] only one or two with cargo [to sell].”

However, such high etac prices are not expected to last.

Some think prices will peak within the next week or two before some softening when the tightness of supply eases.

“I think prices will peak soon because of supply soon coming back,” one producer said.

“If it [the price] stabilises at this level it will be attractive again for importers.”

A Swedish player said: “I think it [prices] will stabilise. Everyone will try to keep it at that level. It’s not in everyone’s interest for prices to go too high [as more importers would be attracted back to the European market]”

A greater number of sellers would result in increased competition and likely depress etac prices further.

An Indian producer agrees that European etac prices have risen enough to become attractive again.

“[European] prices are good enough for us to make margins,” this source said. “We didn’t want to sell in Europe [when prices were lower], but now levels are OK to divert sales to Europe.”

According to one European distributor, players with volumes to sell are taking advantage of high prices ahead of any softening.

“I’ve seen more spot offers this week,” the source said. “People are already trying to downsize their stocks. If I had 300 tonnes of etac, I’d try to get rid of it before prices go down.”

European etac prices were last at this level in November 2011 after a European producer declared force majeure in mid-June of the same year.

By Jo Pitches