With news of a €15/tonne reduction for August propylene following the initial settlement at a rollover (see below), some buyers in the European acrylate esters market have been spurred on to seek further reductions this month.
However, a balanced supply/demand situation was keeping any downward price movement tempered.
Several players said that despite the reduction, there is already talk of August contracts settling at a rollover as some purchasers are concerned about securing volumes this month.
One producer expects that prices would remain stable throughout August, adding that the upturn seen in Asia is keeping any potential imports from the region into Europe limited.
Demand is noticeably slower this month, though a quiet August is traditionally expected due to players absenting themselves from the market during the summer holiday period.
Several sources said that they 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 seller said that many consumers were running stocks close to empty throughout August, holding back on replenishing volumes in anticipation of lower prices. However, others feel that a general sense of uncertainty amongst players is leading to some active purchasing in order to secure material.
Spot values are relatively steady this week. There continues to be butyl acrylate (butyl-A) and ethyl acrylate (ethyl-A) being offered at low numbers, but sources said that once this material has been sold the market should stabilise.
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
