SINGAPORE (ICIS)--Asia’s vinyl acetate monomer (VAM) spot prices continued to firm to multi-month highs on tight supply with market expecting the firm trend to continue in May.
Firm offers were scarce during the week amid lingering tight supply and robust demand from international traders seeking spot molecules for markets outside Asia.
The majority of producers were short of spot cargoes or were not in a hurry to make offers, on account of supply shortages on a global basis.
Several VAM plants in Asia and the United States of America are currently undergoing or scheduled for maintenance shutdowns. Demand for Asian spot molecules to Latin America has resultantly been strong.
A major VAM producer was mulling a $100/tonne increase for its May delivery cargoes following price hike announcements by a US-based VAM producer in the previous week for the North America market.
However, firm offers have not been formally announced during the week.
“We don’t have much cargoes to sell now,” a global producer said.
A global producer was said to have shipped around 12,000 tonnes of VAM from its Asian production bases to the US to plug supply shortages.
“Everyone is very tight now [and] on allocation [basis],” another producer added.
A key buyer concurred that prices were likely to be supported as long as key producers’ volumes for Asia remained curtailed.
“The main point is that manufacturers [are] exporting VAM to the US,” the buyer said, adding that this was driving up prices in Asia.
Selling indications for May deliveries were mentioned at $930-950/tonne CFR SE Asia, following transactions at the high-$800s/tonne CFR SE Asia for second half of April shipments.
In the key south Asia market of India, the selling indications for May delivery cargoes were at $960-1,000/tonne CFR India and around $1,021/tonne CFR India on a zero import duty basis.
April delivery cargoes were previously transacted at the high-$800s/tonne CFR India on a zero import duty basis.
During the week ended 31 March, prices on a CFR SE Asia basis were at $880-900/tonne, an increase of $20/tonne from the previous week, ICIS data showed.
Prices on a CFR South Asia basis during the same week were at $890-915/tonne, unchanged from the previous week.
The sentiment of most market participants was that the tight supply-driven price rally was likely to be sustained into May.
Thereafter, expectations of an ease in supply following the completion of the plant turnarounds in Asia may start to weigh on prices.
Focus article by Helen Lee