Asia VAM supply shortage worsens after Dow’s force majeure

SINGAPORE (ICIS)–Asia’s vinyl acetate monomer (VAM) supply shortfall may be exacerbated as demand emerged from the US and Europe following Dow Chemical’s global force majeure (FM) on supply of the material, which will be in effect for about two months.

“We have many prompt inquiries from [the] US and Europe now,” a source at an Asian VAM producer said, adding that no offer has been made yet as its supply is “crazy tight”.

The tight supply may continue supporting Asian VAM prices.

In the week ended 18 May, spot prices of ethylene-based VAM across Asia rose between $10-50/tonne to $1,410-1,430/tonne CFR NE Asia; and $1,380-1,400/tonne CFR SE Asia/South Asia. The prices are at their highest levels since 2014, ICIS data showed.

VAM shipments from Singapore have dried up since April amid shipment postponements and delays, following curtailed output at VAM plants in the southeast Asian country, as well as in Taiwan, due to shortage of feedstock acetic acid.

In Taiwan, Dairen Chemical’s VAM plants in Mailiao were in the process of ramping up operating rates after the company purchased feedstock acetic acid from the spot market.

Dairen is part of Chang Chun Petrochemical, whose acetic acid plant that had an outage on 21 April has resumed operations at low rates in the week ended 11 May. Normal operations at the plant are expected after a few weeks, according to sources close to the company.

Some VAM buyers in Asia expect to continue importing June shipments as their term supplies from Taiwan could not be confirmed due to the producer’s focus on catering to domestic customers, and captive consumption.

Prior to Dow’s FM declaration, Asian buyers were widely anticipating the supply tightness to be alleviated by around the middle of June, when exports from China are expected to resume following completion of a turnaround at a major VAM plant.

“The FM from Dow impact us because [they are a] regular supplier of us but not the principal,” said a source at a south American-based buyer, who was turning to Asia for supplies.

“At this moment, the prices that we get from Asia is too high compared to the prices that we are buying now,” the source said.

VAM producers in Asia are mainly catering to their long-term customers and focusing on captive consumption.

Focus article by Helen Lee

Picture:  Chinese workers make soles of sports shoes in Jinjiang, Fujian province, China. Vinyl acetate monomer (VAM) is used on soles of sports shoes. (Source: Imaginechina/REX/Shutterstock)