Price and market trends: Europe etac suppliers target price increases

04 July 2014 10:13 Source:ICIS Chemical Business

In addition to the feedstock price hikes, a number of participants still view the European market as balanced to tight

Both local suppliers and importers of ethyl acetate (etac) to the European market are aiming to increase July prices on the back of higher feedstock costs, sources said on 27 June.

The European July contract price for feedstock ethylene settled at an increase of €50/tonne from June.

There have also been recent increases of acetic acid prices in both Europe and Asia.

“Plus €40/tonne has been targeted [for etac],” one producer said, having spoken of the feedstock price hikes. “With ethylene and acetic acid prices up, [producers need] at least €40-60/tonne on top to keep margins where they are.”

In addition to the feedstock price hikes, a number of participants still view the European market as balanced to tight.

A second producer said: “The market is tight, there’s not enough product there. Demand has been healthy – we’re looking for a €30-50/tonne increase.”

The first producer added that Indian importers are also facing upward pressure on prices.

“There are still not many importers around [selling to Europe]. Whatever shipments are offered from now on are expensive. [Feedstock] acetic acid in Asia and Europe spot prices are very high. Indians [suppliers] are looking for higher numbers.”

An Indian producer confirmed this: “Imports [into Europe] are still not at full throttle. Supply and demand are imbalanced [with the latter outweighing the former].”

Disagreeing with the notion of a European summer slowdown of business commencing in July, this source said that looking at figures from previous years, July business is usually good.

“If July is a high demand month [this year], [etac] prices will go up because of [an imbalance of] supply and demand. Now [feedstock] acetic acid is extremely short in Asia. [There have been] huge feedstock price hikes of $100/tonne in some markets. We’ll see an [etac] increase of €50/tonne.”

However, some market participants are sceptical of significant etac price hikes, arguing that the European holiday season is about to get underway in some countries.

“I have my doubts about demand in the holiday season,” a distributor said. “Especially in Germany, holidays will start a week from now, on 4 July. Our holidays are for six weeks.”

While this source agrees with the reasoning behind the targeted price hikes, it is not convinced that they will be accepted by the market. “It’s the first argument you get from producers [that etac prices have to rise because of feedstock price hikes]. I agree that it’s feedstock driven. But it doesn’t mean end users will pay these numbers, because of a lack of consumption. [End-users] will find distributors who will sell at lower levels.” This source added that everything will depend on demand in July.

Another distributor speaks of quarrelling in the market, with producers seeking much higher prices and customers only willing to pay relatively low prices.

“This week I’ve not done business because I can’t, and I won’t because of the uncertainty [regarding prices],” this source said. “We are still debating with both sides [suppliers and customers].”

By Jo Pitches