OUTLOOK '18: Asia’s VAM market to be supported by demand growth

09 January 2018 02:25 Source:ICIS News

SINGAPORE (ICIS)--Asia’s vinyl acetate monomer (VAM) market is expected to find support from supply shortages due to curtailed output in China as well as plant overhauls in the early part of this year, whereas the longer term consumption growth is expected to stem from northeast Asia and India.

The shortage of feedstock natural gas amid the winter heating season in China caused the prolonged outage at Sinopec Sichuan Vinylon’s VAM plant since 21 December 2017. The plant was unlikely to resume operations in January 2018.

A couple of ethylene-based VAM plants are also slated to shut for maintenance from 8 January onwards.

The supply availability of spot cargoes from Japan was expected to be limited until the second quarter of 2018 due to a plant shutdown.

Separately, another VAM plant in China may be taken off line in February due to feedstock cost pressure, according to source close to the company.

On this account as well as the cost push factor from firmer feedstocks ethylene and acetic acid values prompted suppliers of ethylene-based VAM to raise price targets for January shipments.

Downstream ethylene vinyl acetate (EVA) producers, namely those in South Korea, plan to focus their output on EVA grades with higher vinyl acetate (VA) content of 28-33% in 2018, rather than grades containing less VA, amid buoyant demand for the higher VA content grade from the downstream photovoltaic industry.

This was expected to contribute to additional VAM demand of at least 20,000 tonnes in 2018 in South Korea, according to industry sources.

The longer term outlook was likewise optimistic on the part of producers owing to capacity expansion plans in several other downstream sectors, namely as downstream polyvinyl alcohol (PVOH) production capacities in Japan and Taiwan were slated for expansions in 2019, which would curtail the VAM volumes available from the integrated producers for the merchant market.

Capacity expansion plans in the downstream vinyl acetate ethylene (VAE) copolymer sector in south Korea in 2019 further bolstered the sentiment of suppliers on the northeast Asia VAM market, especially since the market could not benefit from the supply of non ethylene-based VAM from China due to product application concerns, unlike the case in southeast Asia and India.

In India, VAM consumption was also set for a marginal increase in 2018 as a downstream emulsions and adhesives producer plans to increase its plant capacity by the first quarter.

Set against a background of a lack of new VAM capacities and a tight supply-driven price rally in the most part of 2017, market players were largely optimistic on the market outlook in 2018 despite a lighter schedule of plant turnarounds compared to 2017.

Asia VAM plant turnaround 2018-2019

Company Capacity (tonnes/year) Location Turnaround period
Dairen Chemical Corp. 300,000 Mailiao 8 Jan 2018: 1 month
Dairen Chemical Corp. 120,000 Dasheh Early March 2018: 1 month
Dairen Chemical Corp. 350,000 Mailiao Aug/Sept 2018: 1 month
Dairen Chemical Corp. 350,000 Singapore 2018
Sipchem IVC 330,000 Jubail Industrial City, Saudi Arabia Q2 2018: 15 days – 1 month
Celanese 300,000 Nanjing, Jiangsu Summer 2018
Showa Denko 175,000 Oita, Japan 7 March-12 April 2018
JVP 150,000 Sakai, Osaka June-July 2018: 20-26 days
Sinopec Sichuan Vinylon Works 300,000 + 200,000 Chongqing, Sichuan province, China Sept-Oct 2018: TBC
Nippon Gohsei 180,000 Mizushima, Okayama 2019: early Mar-late Apr around 45 days
Lotte BP Chemical 210,000 Ulsan, S. Korea Apr/May 2019: 1 month
Sinopec Great Wall Energy 450,000 Ningxia, China No major shutdown plans
VAM plant turnaround schedule 2017
Company Capacity (tonnes/year) Location Turnaround Plans
Dairen Chemical Corp 120,000 No 1 Dasheh, Taiwan Early Feb: 4 weeks
Nippon Gohsei 180,000 Mizushima, Okayama, Japan 3 Mar-late Apr
Sinopec Beijing Eastern Petrochemical 90,000 Beijing, China 10-31 Mar
Sinopec Shanghai Petrochemicals 90,000 Jinshan, China 28 Mar - restart date TBC
Dairen Chemical Corp 300,000 No 2 Mailiao, Taiwan Early Apr-29 Apr
Dairen Chemical Corp 350,000 Jurong Island, Singapore 17 July: 1 month
Celanese 300,000 Nanjing, Jiangsu, China Mid Mar-H1 Apr
Celanese 300,000 Nanjing, Jiangsu, China Oct: 4 weeks
Celanese 210,000 Jurong Island, Singapore Nov: 2-3 weeks
Lotte BP Chemical 210,000 Ulsan, South Korea 19 May – 11 June
Shanxi Sanwei Group 70,000 Linfen, Shanxi, China 5 May: 20 days
SIPCHEM/IVC 330,000 Jubail Industrial City, Saudi Arabia 30 May – 1 July
Showa Denko 175,000 Oita, Japan 24 July – 8 Aug
Anhui Wanwei 170,000 Anhui, China 10 July – end July

Outlook article by Helen Lee

By Helen Lee