Tight US acetic acid, VAM supply exacerbated by more FMs, June allocations

HOUSTON (ICIS)–Constrained supplies of US acetic acid and vinyl acetate monomer (VAM) were expected to ease this month, but additional force majeures and allocations have left participants scrambling to find product for June.

Limited US availability was exacerbated further last week when Celanese declared force majeure on acetic acid, downstream VAM and other products because of an interruption in raw-material supply.

INEOS was on planned maintenance at its acetic acid plant, but the inability to supply customers through swaps and exchanges, combined with delays in carbon monoxide supply, prompted the company to declare force majeure.

Acetic acid and VAM participants were expecting relief this week as LyondellBasell restarted operations. However, the company encountered additional repair issues and implemented sales allocation for June.

“The situation is bad, and availability is going to be a big issue,” a trader said.

The three acetic acid producers accounts for 88% of US capacity.

Acetic Acid	Location	US Impact	Status
Celanese	Clear Lake, Texas	50%	Q1 turnaround; force majeure 10 May
Eastman	Kingsport, Tennessee	9%	Q1 production issues
INEOS	Texas City, Texas	20%	Force majeure 11 May
LyondellBasell	La Porte, Texas	18%	Force majeure 18 April; June allocation 0%

The three force majeures in the downstream VAM market accounts for 66% of US capacity.

VAM	Location	US Impact	Status (*denotes according to market info)
Celanese	Bay City, Texas	16%	Q1 turnaround
Celanese	Clear Lake, Texas	25%	Q1 turnaround; force majeure 10 May
Dow	Texas City, Texas	20%	Force majeure 16 Feb; 70% allocation*
Kuraray	La Porte, Texas	18%	Production issues*
LyondellBasell	La Porte, Texas	21%	Force majeure 18 April; June allocation 40%

The spring and summer season is the peak season for construction and do-it-yourself projects, so paints and coatings demand is high.

The perfect storm is pushing up prices, not only in the US but also globally.

Europe is a key export market, and constrained US supply has made the region’s VAM market “ a complete disaster”.

Both regions will be looking to Asia for imports, and prices there are surging for both acetic acid and VAM.

OTHER DOWNSTREAM IMPACTS
US ethyl acetate (etac) supply – which was very tight earlier in the year before loosening a bit recently – has already started to tighten again amid the disruption in feedstock supply.

A trader said it is trying to buy additional etac based on requests from customers, but spot material was hard to find.

Aside from LyondellBasell’s force majeure on etac, market participants have yet to see any sales allocations for contract customers.

Both butyl acetate (butac) and propylene glycol methyl ether acetate (PMA) are facing tightness due to the acetic acid production issues. PMA is a P-series glycol ether.

PMA and butac price increase nominations have emerged for mid-May and 1 June, respectively, even though April propylene contracts settled at a slight decrease and May propylene spot prices have fallen.

Butac prices have held steady, but a producer is seeking a June increase of 10 cents/lb ($220/tonne)

For downstream purified terephthalic acid (PTA) and polyethylene terephthalate (PET), most participants are covered for May.

However, PET production output should see some limitation in June because three acetic acid producers are on force majeure.

Acetic acid is used to produce PTA, one of the main raw materials for PET.

UPSTREAM
Feedstock methanol may be slow to react to the acetic acid outages.

Even though this erodes some demand, these players do not participate in international spot markets.

This means it could take time to impact prices for methanol, as producers are already hesitant to lower prices too much in the face of steep production costs.

Focus article by Tracy Dang

Additional reporting by Adam Yanelli, Deniz Koray, Antulio Borneo, Melissa Wheeler, Josh Dillingham and Morgan Condon

Thumbnail shows adhesive, which is often made with VAM. Image by Shutterstock