Uses

Vinyl acetate monomer (VAM) is a chemical building block used in a wide variety of industrial and consumer products. VAM is a key ingredient in emulsion polymers, resins and intermediates used in paints, adhesives, coatings, textiles, wire and cable polyethylene (PE) compounds, laminated safety glass (used in automotive windshields), packaging, automotive plastic fuel tanks and acrylic fibres. It is also used in furniture glue and chewing gum.

Most end-use markets for VAM are mature, with growth in the largest applications - adhesives, paints, paper coatings and textiles - expected only to track or trail GDP slightly. However, there are strong growth areas for VAM such as ethylene vinyl alcohol (EVOH) barrier resins, ethylene vinyl acetate (EVA) polymers and polyvinyl butyral (PVB).

Supply/demand

The US VAM export market faces weakened demand while domestic supplies are widely viewed as readily available with no major production cuts seen. Typically, seasonal demand has an uptick in Q2 for construction end-use in paints and coatings.

When coronavirus-related stay-at-home measures were first implemented in the US in March/April, some market players noted an uptick in do-it-yourself (DIY) projects, and accordingly, demand for end-use packaging, and paints and coatings was stronger. But after widespread lockdown measures took place in several export destination countries, particularly in Latin America, demand significantly weakened. While the market has not yet had a strong indication of recovery, pockets of stronger consumption have remained in the domestic markets. Exports have increased since the end of 2019, when both planned and unplanned domestic production issues diminished product availability.

As demand globally has weakened, so have export numbers, and the increase seen so far in 2020 has yet to reach the highs seen in August 2019. Concerns of possible supply disruptions and a lack of skilled workers have grown, as coronavirus cases increase where production is located in much of the US.

Prices

US VAM pricing began to decline after crude oil’s collapse in March and as the coronavirus caused lockdowns in the western part of the world. Despite pockets of demand strength from the paints and coatings, and packaging sectors, the overall consumption of product remained thin, pressuring prices.

Contracts declined from March-June before rolling over in July as feedstock pricing gained some momentum, causing some players to believe this was the bottom for prices. Spot export prices also declined significantly over the past quarter amid slower trading activity.

Spot activity in the US is not as highly active as many buy on a contract basis. Historically, US VAM prices have increased and held strong from June-August, as demand is typically higher during summer months. VAM demand often drops in Q3 after the end of the US paint season.

Technology

Acetylene-based technology was used first in the commercial production of VAM with the gas phase process preferred to the liquid phase reaction. Ethylene has now become the preferred feedstock with the gas phase route used due to problems of corrosion and by-product formation when using the liquid phase process. This is why ethylene figures are so prominently in contract formulas.

Acetic acid is catalysed in the gas-phase reaction with ethylene and oxygen in a fixed bed tubular reactor at 175-200˚C (347-392˚F) and 5-9 bar pressure. The VAM is then recovered by condensation and scrubbing, and is purified by distillation. UK-based BP developed Leap, a fluidised bed technology that is said to cut investment costs by 30%. Essentially, the chemistry is the same as the existing technology. The difference is that the catalyst is continuously removed and replenished, which is said to give the process much longer run times compared with the fixed-bed route.

Celanese’s VAntage process is said to raise production efficiency and lower operating costs. The technology is claimed to add production capacity equivalent to a worldscale plant at 10-15% of the cost of building a grassroots unit. Meanwhile, Praxair received a patent for a technique using 99.95% oxygen to reduce catalyst losses and undesirable reaction byproducts, while boosting VAM yields by up to 5%.

Outlook

In the coming months, the VAM market is likely to see downward pressure on top of already slow demand toward the end of the year as is typical for the product once its seasonal peak for paintings and coatings ends. Typically, Q3 sees planned maintenance, which could lead to tightened supplies and prices moving upward. But as the US exports more VAM than it imports, there is some domestic market flexibility if/when production issues occur. Additionally, risks of a second wave of coronavirus infections, as well as of potentially deeper contraction in the global economy, continue to weigh on market confidence. ■