Uses

Vinyl acetate monomer (VAM) is used in water-based paints, adhesives, acrylic fibres, paper coatings and non-woven binder applications. Approximately 47% of VAM volumes go into polyvinyl acetate (PVA), which is a primary molecule in paints, adhesives and other coatings.

Approximately 30% of VAM output goes into polyvinyl alcohol (PVOH), which is used in packaging film and glass laminates.

The remaining percentage of VAM volumes goes into ethylene vinyl acetate (EVA) polymers, ethylenevinyl alcohol (EVOH) barrier resins and polyvinylbutyral (PVB), which is used in automobile windows. EVA and EVOH are providing new areas for uses in co-polymers for specialty adhesives and packaging films.

Supply/demand

Global supply tightened after a winter storm in the US Gulf in late February led to plant outages and force majeure declarations by major producers such as Dow, Celanese and LyondellBasell.

The US supply disruptions occurred when a heavy turnaround schedule was just starting in Asia and the open arbitrage window to Europe drew supplies from Asia, which propelled prices in Asia to record highs in April 2021.

Export availability from China has been curtailed since September 2020 due to a combination of lower output amid firmer calcium carbide feedstock costs and buoyant domestic demand amid increased downstream plant utilisation rates.

China exported 41,040 tonnes of VAM in the first four months of 2021, a 35.5% year-on-year decline while the country continued to import more VAM as 106,316 tonnes were imported in the first four months of 2021, a 39% year-on-year increase.

Adhesives demand from the construction sector was dampened due to lockdowns and social restrictions amid the resurgence of COVID-19 infections across Asia in the second quarter.

Several key buyers in southeast Asia delayed their stock replenishment until the end of June or July, due to a slowdown in distribution sales as well.

Mid-June to mid-August will also see output cuts at downstream EVA plants in southeast Asia.

In India, demand for June shipments weakened following shutdowns and intermittent production at downstream plants as many states remain in lockdowns.

Several buyers are not inclined to return to the market until the second half of June.

Prices

In the past six months, spot prices of ethylene-based VAM in Asia rose, aided by tighter supply globally, firm feedstocks costs and buoyant demand as downstream industries recovered after the lifting of lockdowns amid the roll-out of vaccines.

The VAM feedstock spread in southeast Asia rose to highs of around $937/tonne in early April 2021 due to tight global supply, after the spread moved into positive territory in December 2020.

The completion of plant turnarounds by the second half of May in Asia coupled with plant turnarounds in the downstream EVA sector and the resurgence of COVID-19 cases in the second quarter weighed on pricing.

Technology

VAM is usually produced by the catalysed, vapour phase reaction of acetic acid with ethylene and oxygen in a fixed bed tubular reactor using a supported noble metal catalyst. The VAM is recovered by condensation and scrubbing and purified by distillation. Ethylene-based VAM accounts for 75% of the capacity globally with 25% produced via acetylene route in China.

Outlook

Demand for VAM is set to stay supported in 2021, driven by capacity additions in downstream EVA, vinyl acetate emulsion (VAE) powder and PVOH sectors in China, South Korea and Japan.

A downstream VAE polymer producer in South Korea in 2021 will boost its VAM offtake to 70,000 tonnes from 40,000 tonnes in 2020. The company in May 2020 started up its new spray dryer for dispersible polymer powder with a capacity of 80,000 tonnes.

Separately, Hyundai Chemical in H2 2021 is due to start up its 300,000 tonne/year (EVA/low density polyethylene (LDPE) swing plant in Daesan. The plant will require approximately 21,000 tonnes of VAM per month if production of high VA-content EVA is maximised.

There are no new VAM capacity expansions in 2021, but there are two expansions with total capacities of 500,000 tonne/year due to start-up in 2022, including INEOS Oxide and Jiangsu Sailboat. ■