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VAM Margins to Remain Tight in September, Major Corporations Revised their Guidance for Q3
VAM Margins to Remain Tight in September, Major Corporations Revised their Guidance for Q3

VAM Margins to Remain Tight in September, Major Corporations Revised their Guidance for Q3

  • 17-Sep-2024 5:22 PM
  • Journalist: Yage Kwon

Vinyl Acetate Monomer (VAM) supply margins remained tighten in September, preliminary estimates undertaken by ChemAnalyst revealed. With Celanese lifting their force majeure on VAM sales last month, the supply situation continues to remain tightened at the polymerization end and integrated margins currently face challenges across the Western hemisphere, ChemAnalyst assessed. Last week, Dow, a major player of intermediate VAM supplier for US and Western hemisphere decided to revise their Q3 performance, with EBIDTA to Revenue reaching 13% for Q3. Due to unfavorable weather seen throughout mid-September and cyclonic actions, prices of basic feedstocks like methanol, acetic acid and VAM for the supply of adhesives, EVA copolymers and other chemicals have been disrupted.

In September, as per ChemAnalyst’s latest assessment Vinyl Acetate FOB Texas was assessed around USD 1260/MT. The prices recovered after Celanese hit FM on feedstock supply in June to ease the de-stocking effect as many customers dumped their higher contract prices of VAM. According to ChemAnalyst’s study, the price drop was triggered by investors speculating a slowdown in US markets in H2 FY24 and FY25 as sticky inflation and high interest rate environment to persist. Based on several quotations and interviews conducted, one market supplier of VAM revealed that despite supply restrictions of VAM being one of the harshest measures being undertaken for recovering prices, the price recovery couldn’t achieve the levels that it set out for.

VAM prices dropped to as low as on spot basis to USD 900/MT, when Methanol spot prices were assessed around USD 400/MT in the first week of June, triggering negative net profit scenario for both Dow and Celanese in US and Western hemisphere.

The company in their statement revised their Q3 guidance as demand situation has not been improving. The company's recent financial outlook has taken a hit due to an unexpected incident at a Texas plant and rising costs in Europe. However, better conditions in North America are helping to balance these negative factors. While the upcoming quarter is expected to have normal demand fluctuations, the company anticipates improved performance due to lower maintenance costs, increased production, and fewer weather-related disruptions. Despite these challenges, the company remains committed to its operational and financial goals and long-term growth strategies.

The prices of VAM and acetic acid are poised for recovery in September as autumn and pre-fall trading season across APAC-Europe-North Americas have begun, while demand pickup and export orders from US has been falling, indicated the latest freight intelligence as APAC bound deliveries fell. Prices, although to recover as major consumers of US based deliveries has been Europe and North Americas themselves. Peak pricing has, according to some players, have now been reached and “little scope” in upward movement in VAM pricing is expected as frequencies of orders have been lackluster.

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