Price and market trends: Global oversupply pushes Europe butyl-A prices to 4-year low

15 August 2014 10:52 Source:ICIS Chemical Business

Most players do not expect to see any significant uptick in consumption for the remainder of the year

A global oversupply of butyl acrylate (butyl-A) has caused spot prices in Europe to fall by a further €10-50/tonne, sources said on 6 August. Average spot prices have dropped by €135/tonne since May because of increasing pressure on availability, amid steady demand.

Prices began a general downtrend in August 2013, although they saw a slight recovery between March and May this year.

Prices are now down to a level last seen in the first quarter of 2010.

Imports from South Africa, Russia and Asia – most notably Korea - are entering Europe at competitive prices, with a couple of buyers indicating that they have received spot offers of €200-300/tonne below their contract prices.

The market is usually affected by the summer slowdown in August, but demand is not that much lower than it was in July, sources have said, as overall demand from the coatings sector is quite steady.

A few players expect September demand to rebound slightly as the majority of market participants will have returned from holidays and manufacturing rates are expected to return to normal.

However, most players do not expect to see any significant uptick in consumption for the remainder of the year. Many question the sustainability of spot prices.

A handful of players are concerned that if supply and demand fundamentals remain as they are for another few months, producers could be spurred to reduce output.

One seller said that plants could be at risk of failing if low acrylate price levels persist as producers might delay investments in plant maintenance to cope with current raw material costs.

“What will happen in the next three months? My concern is that producers will reduce output,” a buyer said.

“My major concern is if things go bust and you don’t have a contract supplier, you’re in trouble.”

The demand pattern has been different this year compared with previous years, so the “peak coatings season” that traditionally runs from March to October has so far been less evident.

Apart from the gentle dip in August, demand has largely been flat since the end of March, following better-than-expected offtake in February, prompted by mild winter temperatures.

By Helena Strathearn