VAM Prices Stabilize in August, Prices to Firm in September as Supply Tightening Persists in Europe

Vinyl Acetate Monomer (VAM) prices have shown stability throughout August, initially driven by supply tightening, which was later followed by increased availability. The market turned bullish after Celanese announced its maintenance plans for VAM and acetic acid, leading to a surge in orders for September and October. Despite this, acetic acid prices in Europe remained steady throughout the month. VAM margins for Europe-bound deliveries were unchanged in the final week due to weak demand and existing contractual obligations.

In the early weeks of August, VAM supply remained sluggish compared to June and July levels. By the week ending 30th August, spot prices for feedstock ethylene had risen by up to 11% since the beginning of the month. This was largely due to reduced production output, with Celanese and other major US producers facing challenges that kept production below optimal levels. Additionally, methanol and acetic acid prices for the European market, which were not subject to discounts, saw a significant surge, rising by USD 16 to 20 per metric ton. These increasing costs have contributed to added cost pressures, which could potentially counterbalance the expected decline in demand in the coming months. In the second week, Celanese lifted the force majeure on its VAM sales in the Western Hemisphere, largely due to resolving supply challenges and securing the availability of methanol and other key upstream products. Feedstock acetic acid prices have been gradually rising, and new supply is expected to increase prices as supply expands while demand catches up, particularly in parts of the Eurozone that have remained subdued.

Demand for VAM remained stable and eased on a month-over-month basis. In Germany, downstream consumption of VAM improved, while the Eurozone's Producer Price Index (PPI) showed mixed results. During the second and third weeks, VAM procurement in Northwestern Europe increased, particularly in the Italian and Dutch markets, which remained buoyant due to stabilization in construction activities. This monthly increase was higher than anticipated, indicating a potential short-term rise in inflationary pressures within the region. The market is currently expected to consolidate supply and maintain tight VAM supply across Europe and the Western Hemisphere. In the final week, downstream Polyvinyl Acetate prices remained stable due to smooth transactions in the cosmetics, textiles, and other end-use industries. The paints and coatings industry continues to face a slump, though newer orders for September and October saw increased volumes by the end of August, according to market participants.

The latest prices assessed by ChemAnalyst for 30th August 2024, FD Hamburg, stood at approximately USD 1,330/MT.

ChemAnalyst has forecasted a bullish outlook for VAM in September, with price increases anticipated due to improved demand from the packaging and adhesives sectors, driven by consumption in the coming months.