Ethylene Vinyl Acetate market is expected to face supply tightness due to rise in prices of comonomers Vinyl Acetate monomer (VAM) and ethylene in the region. Manufacturers expect upstream Ethylene Vinyl Acetate cost pressure to diffuse partly by the last week of February post conclusion of the Winter Olympic games. However, the Chinese government’s winter air pollution control norms could continue till mid-March when the restrictions are likely to be lifted.

Crude oil prices are expected to increase further by late February or early March as OPEC+ continues to fall short of its production targets. The OPEC plus’s January collective targets fell short by seven hundred thousand barrels even as the production levels increased by 0.5% from the December levels. Given the continued lag in production levels, the cost pressure on the downstream value chain including prices of comonomers VAM and Ethylene could further aggravate in the coming weeks.

Producer margins along the Ethylene Vinyl Acetate value chain are expected to remain tight in the Asia-Pacific (APAC) region until the end of March as forecast by ChemAnalyst in our coverage of VAM’s APAC market dated 2^nd February. South Korean supplies to its overseas market in East Asia and South Asia continue to remain scarce as LG Chem’s Ethylene Vinyl Acetate 28% contracts bound for India remain sold out for the month of February and could follow through to March. Contracts bound for China too remain scarce owing to continued production cuts from Chinese domestic producers.

Strong demand from the end user solar panel encapsulation market and persistent supply tightness due to higher raw material costs throughout East Asia means that the prices of Ethylene Vinyl Acetate could continue their upward trajectory until mid to late March at which point an ease in supplies could be expected.