European Vinyl Acetate Monomer Prices Accelerate in April 2024, May prices to remain stable

Hamburg (Germany): There's a global shortage of vinyl acetate monomer (VAM), a key material in many industries. According to FEICA (Fédération Européenne des Industries de Colles et Adhésifs), demand currently outstrips supply by about 1 million tons, causing a significant price hike by chemical companies. US, being the major supplier of VAM, continues to tighten the market as suppliers continue to argue that severe oversupply persists, though price movements reflect otherwise.

This shortage stems from production facility closures across Europe, the US, and Asia due to maintenance, malfunctions, or accidents. Europe alone faces a shortfall of roughly 500,000 tonnes.  With demand exceeding availability, VAM producers have reported plant issues and implemented sales controls. European VAM prices reported by ChemAnalyst for German deliveries for US as well as European suppliers were assessed around USD 1330/MT FD basis.

Market intelligence suggests that deliveries from Antwerp to Italy went as high as USD 1450/MT for contract exceeding 1,000 tons. Pricing movements tracked by ChemAnalyst for VAM show that European and US markets are facing tighter supply crunch owing to US being the major contractor for VAM supplies to Europe. As shipping charges fell significantly in the month of March and April, the prices still remain 14% higher than October 2023 prices, further increasing delivery cost for European supplies from US.

Rising demand for VAM in European market was anticipated previously, but the pace has been impressive owing to easing of downturns and fall in energy contracts for the year 2024-25 fiscal. FEICA, in its study revealed further that prices are to stabilize as scheduled downturns if considered for acetic acid and VAM supply in May 2024, the gap to exceed to narrow down to 0.8 million tons by the end of the second quarter of 2024 and the price acceleration for VAM to slow down further in the coming quarters.

Spot markets are currently stable with prices not moving more than 0.5% in either direction as traders is holding up their purchases and sales as companies reveal their Q1 reports signaling VAM markets of the anticipated issues. One important issue in the accelerating prices of VAM, according to experts, is the price of ethylene continues to stay higher despite polyethylene markets going bearish.

US EIA’s Natural gas report for the week ending on 24th April revealed that ethane to Natural gas premium narrowing indicating that suppliers are reducing ethane output which is expected to trigger up ethylene prices in the spot markets in the coming month. Since VAM is produced from both acetic acid and ethylene, rising ethylene spot prices could further exacerbate rise in VAM prices for European supply.

The critical supply situation has triggered a sharp rise in VAM prices since late 2013, heavily impacting Europe's adhesives industry. VAM is vital for dispersion adhesives, widely used in sectors like automobiles, construction, furniture, packaging, and even DIY projects. It's also an important raw material for paints, coatings. ChemAnalyst has retained a drop in prices for May is still retained with 2% monthly drop in prices, though prices to recover by the end of May and accelerate further in June with supply demand gap to intensify further as shipping is expected to turnaround.