Rotterdam (The Netherlands): Vinyl Acetate Monomer (VAM) continues to face force majeure and supply chain disruptions into the month of February. The previous month saw continuous price recovery largely owing to the Red Sea crisis and the piling of orders, causing high speculative safety stocking up. In this context, the Chinese market saw significant holiday restocking by the end of January. February begins with further complications for Asian markets as a cold snap and lower operating capacities, coupled with festive holidays, further tighten the regional VAM supply, pulling up prices in Asian markets. According to ChemAnalyst, Asian markets observed a 14% month-on-month recovery in prices by the beginning of February.

In North American and European markets, Celanese and LyondellBasell continued to be the major suppliers of VAM. Freight charges continue to remain elevated in February as pending orders continue to surpass newer capacities added by freight carriers. Suppliers from US markets have decided to prioritize the South American and European markets largely owing to lower piling of inbound orders and weak Asian demand in the month as Lunar New Year holidays commence in Asia. VAM importers to Europe are undertaking safety stocking despite demand remaining on the lower end as manufacturing and construction slump. European markets are recovering in their logistical competence with higher capacity utilization, while German rail strikes offset it partially. VAM upstream Acetic acid and methanol supply are also being tightened as input crude and naphtha prices surge, causing lower petrochemical margins for Europeans and increasing reliance on American imports. Supply from Mediterranean markets is being replaced by North American markets due to competitive pricing offered by US markets, with falling Asian orders for the month of February expected to create an oversupply situation globally.

In Asian markets, the supply of VAM is being tightened, with Chinese capacities remaining off-stream largely owing to feedstock supply shortages. VAM upstream Methanol supply from Iran and the Middle East is facing challenges due to container shortages and a strong Chinese cold snap, forcing higher lead times and tightening tanker supply, pushing up freight charges into February. With February holidays approaching, Asian port operations are expected to slide down further, pulling up freight charges further due to holidays. Demand sentiments for VAM in Asian markets are expected to remain lower in the given timeframe, while prices are expected to inflate largely owing to strong demand from Indian markets and supply tightening offsetting the weak demand in East Asia. Inflation in Asian economies continues to slide down faster, largely owing to real estate challenges and high input prices owing to high crude and naphtha prices. VAM markets' recovery in terms of volume and prices is expected to recover in the second half of FY24 led by strong economic recovery.