Some initial European acrylic acid (AA) contracts for August have already been agreed this week at a rollover from the previous month despite initial talk of possible decreases.
The €15/tonne reduction eventually agreed for August propylene appears to have had little downward impact on AA pricing so far this month, as the domestic supply/demand dynamic remains balanced.
With prices in the Chinese market continuing to firm on restricted availability in the region, no significant volumes are expected to make their way into Europe.
Several producers said that customers are keen to secure volumes in light of a general sense of uncertainty in the market due to a wide scattering of prices (especially throughout the different grades of esters) as well as wider macroeconomic concerns such as the US debt issue and talk of a potential double dip recession in Europe.
Sources expect the market to pick up towards the end of the month as players return from holidays. While much would depend on end use market demand, sellers are optimistic that September would be a strong month for sales.
One supplier added that price development in September would largely depend on where propylene settles.
Upstream
The European propylene contract settled at €1,115/tonne FD NWE for August, down by €15/tonne from July. This was the second number to emerge after an initial rollover settlement failed to find the necessary support from the market. While feedstock is firm, the bearish supply-and-demand balance continues to weigh on spot levels, but sources say these are showing signs of stabilising around €900/tonne CIF NWE.
High captive consumption and production outages at several European manufacturing sites have sustained oxo-alcohols prices despite softer upstream propylene values. Slow demand continues to exert downwards pressure on prices of plasticisers, although suppliers expect the market to stabilise in the next few weeks as several European manufacturing sites enter their turnaround season.
Asia
Acrylate spot prices in the key Chinese market continue to gain ground as local suppliers maintain strict discipline and raise offers, citing lean inventory levels. Tightening spot availability because of turnarounds are also exacerbating the situation.
Taiwan’s Formosa group has shut a 540,000 bbl/day refinery and 520,000 tonne/year Group II base oil plant in Mailiao following a fire at a propylene pipeline over the weekend. No damage was reported at the 100,000 tonne/year crude acrylic acid plant located in the same complex, and operating rates were maintained at 100%, said a source from the company.
($1 = €0.70)
This week on ICIS ( www.icis.com ) :
02/08/2011 18:20 China’s Zhejiang Julong plans 450,000 tonne/year propylene unit
02/08/2011 11:53 Nippon Shokubai to expand acrylic acid, special esters capacity
02/08/2011 10:45 Taiwan’s Formosa Plastics withdraws n-butanol offers after fire
01/08/2011 11:57 Taiwan’s Formosa Plastics suspends propylene offers after fire
