Asia EVA seen steady despite looming Q2 demand lull

08 March 2018 05:56 Source:ICIS News

SINGAPORE (ICIS)--Spot prices of ethylene vinyl acetate (EVA) with 14-20% vinyl acetate (VA) content in the key China and India markets are expected to be supported by reduced supply despite an expected weakening of demand from major downstream footwear materials sector in the second quarter.

Availability of spot cargoes in Asia will be constrained by a heavy turnaround schedule at plants that supply to the region, as well as a switch to low density polyethylene (LDPE) production at some swing units.

EVA production sked

During the week ended 6 March, prices of EVA with VA content of 14-20% were assessed at $1,430-1,620/tonne CFR (cost & freight) China Main Port (CMP), up $20/tonne at the high end of the previous week’s price range; and at $1,620-1,650/tonne CFR south Asia, down $10/tonne at the low end of the previous week’s range, ICIS data showed.

Buyers were seeking either a price rollover or a reduction for March deliveries on account of corrections in ethylene feedstock values early this year.

But EVA producers have been reluctant to lower their offers, citing that previous gains in feedstock costs have yet to be fully reflected in their product prices.

Demand for the 14-20% VA content grade in China and India is healthy amid the peak production season in the downstream footwear material sector.

Downstream footwear and footwear materials producers in India plan to operate their plants at full capacity from March to May, while those in China are looking at a high average run rate of 80% for March to April.

EVA suppliers were optimistic that Indian buyers would soon feel the impact of reduced output and eventually accept higher prices for selective South Korean-origin cargoes, which are exempt from the 7.5% import duty.

Some EVA suppliers have reduced their sales volumes this week for second-half March and April shipments of the 14-20% VA content grade to India following a lack of buying interest at prices in the mid-$1,600s/tonne CFR India on a duty paid basis, in favour of other markets such as Russia and the Middle East.

Several Asian EVA producers have reduced production of the 14-20% VA content grade due to production swings to low density polyethylene (LDPE) and plant shutdowns and hence cited reduced inventory pressure as reasons for targeting higher prices.

Focus article by Helen Lee

Picture: Inside a shoe factory in China. The footwear industry is the major downstream of ethylene vinyl acetate (EVA). (Source: ImagineChina/REX/Shutterstock)

By Helen Lee