How Asia Pacific Ethylene Vinyl Acetate Market could see Softening of Supply in Q2 of 2022
- 30-Mar-2022 9:42 AM
- Journalist: Yage Kwon
The Ethylene Vinyl Acetate market in the Asia Pacific (APAC) region has been reeling under supply tightness since the beginning of FY22. The new wave of pandemic that started in the last week of December 21 had forced Asian refiners and manufacturing units to cut down production rates which led to supply tightness in the raw materials market. ChemAnalyst’s earlier forecasted price range for the feedstock Vinyl Acetate Monomer (VAM) Market in the APAC region has been revised in the aftermath of the onset of war in Eastern Europe.
The sudden surge in prices of crude oil and in turn the prices of Naphtha caused the prices of comonomer VAM to rise sharply in the month of March. Ethylene comonomer prices in the Northeast Asian and Southeast Asian regions have seen rises of 3% and 5.7% respectively on a CFR basis. Most refineries have cut down production of ethylene since the last week of February coming under pressure from higher naphtha feed prices.
South Korean manufacturers including Hanwha Chemical Corporation and LG Chem have cut down exports to Southeast Asia and South Asia for the most part of Q1 of FY22. Imports to China too have suffered largely due to the congestion at major container terminals as the resurgence of covid 19 cases prompted the government to enforce strict protocol vis-à-vis transit of cargo ships in to and out of the ports. Chinese domestic manufacturing has been hit, first, by the government’s winter air pollution control regulations and then by the exorbitant feedstock prices since the last week of February caused by the start of the war between Russia and Ukraine.
A softening in the supply of the raw materials can be expected during the late April to early May period provided the geopolitical scenario in Eastern Europe stabilizes in the short term. The rise in the number of covid 19 cases in the East Asian region could play spoilsport in the early part of Q2 of FY22. EVA 28% supplies to India from the Far-East Asian region could continue to be constrained in the light of the re-emergence of the pandemic in the region. Overall, the outlook for the APAC EVA market remains mixed for the quarter ending June of FY22.