The European acetic acid market remain balanced to long, most sources said this week.
Contract negotiations for the third quarter had hardly started after the late settlements from the second quarter. Prices were expected to come down, however, as both sellers and buyers agreed that the market has been overpriced in recent months.
One buyer stated it had already settled all of its Q3 contracts, though, at decreases of 40/tonne, which would bring levels to below the 600s/tonne, the source said.
Many agreed that the outage of BP did not have a significant effect on the supply side of acetic acid. Both anticipated imports from Asia, as well as ample local supply from other sellers meant that material remained readily available for the buy side.
On the spot market, little activity was noted. However, several players anticipate softer prices, in line with lower contract prices.
One trader stated it had done business in the 630-650/tonne range. Another trader said it had done some spot business this week at 640-650/tonne FCA. A buyer stated even lower levels, with offerings received below the 600/tonne mark.
Spot numbers were brought down accordingly to 600-680/tonne FD.
BP confirmed this week that it expected its force majeure to end ninety days after it started in mid-June, which would indicate that production would resume at 8 September. Although this was about a week later than previously projected, the allocation rate for August was inched up from 60-70% to 70%, the company said.
MSK meanwhile confirmed it still plans to restart its 100,000 tonne/year plant in Kikinda, Serbia, in the beginning of August but could not confirm exact dates yet.
Upstream, there were two methanol trades at 270/tonne FOB Rotterdam in the European market this week. Market conditions are thought to be fairly balanced, with no noticeable decrease in demand despite it being the summer holiday season. Firmer European prices are attributed to upward movements in the US and Asian markets, which are both experiencing limited supply.
Downstream, European June purified terephthalic acid (PTA) prices moved down to 928950/tonne FD NWE, a 2627/tonne fall from May, in line with feedstock developments. The 85/tonne fall in July paraxylene (PX) prices could result in a further 40/tonne decrease for July PTA, but this remains to be seen. PTA players are expecting PX prices to increase by 60100/tonne in August.
VAM negotiations for the third quarter were still ongoing, with many players anticipating a decrease of 30-60/tonne. First indications were that contracts would settle below 1,000/tonne, but most players said it would still be several weeks before the contract talks would be finalised.
($1 = 0.70)
Covering editor: Madelon Ten Cate
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