VINACHEM

Spot acetic acid prices in Asia are expected to increase on tightened supply following a production outage at a major facility in China.

Offers this week were heard up by around $30/tonne at $390/tonne FOB (free on board) China and above, market sources said.

On 17 February, acetic acid prices were assessed at an average of $355/tonne FOB China, up by $5/tonne from the previous week, according to ICIS data.

Prices had faced some downward pressure immediately after the Lunar New Year holiday amid demand weakness in China. Suppliers in the country were prompted to lower their export offers to offload cargoes in the international market, but strong feedstock methanol prices prevented any significant declines in acetic acid values.

The Lunar New Year on 28 January this year was celebrated in most parts of northeast and southeast Asia, with China on holiday for a full week from 27 January to 2 February.

On 18 February, however, acetic acid supply has tightened when major Chinese producer Jiangsu Sopo unexpectedly shut its 800,000 tonne/year plant due to a technical fault. The plant is expected to remain off line for 10-15 days, according to a company source.

The plant at Zhenjiang in Jiangsu province currently has low inventory and would mainly supply to its contract customers, the source said, but added that any impact on export discussions will be limited.

“The export market is not much affected as discussions now are for cargoes for end March/early April loading and [plant] operation would have resumed by early March,” the company source said.

Jiangsu Sopo has a 600,000 tonne/year acetic acid unit in Zhenjiang that continues to run, while its smallest unit with a 200,000 tonne/year capacity was permanently idled.

The shutdown of the company’s biggest acetic acid plant prompted other Asian producers, including those in China, to hike offers this week. Producers are also citing cost pressures from higher prices of feedstock methanol, for raising their acetic acid offers.

The price increase this week was “more of a cost factor”, said a source from a different producer, but also attributed the increase to the short-term tightening of supply caused by Jiangsu Sopo’s shutdown.

“Any bearish sentiment from two weeks ago [due to softer post-Lunar New Year demand] is all gone,” the producer said.

Fresh offers for acetic acid from Jiangsu Sopo were up $30/tonne, a company source said.

Other Asian producers and suppliers also hiked their prices by around $30/tonne, with one mulling a bigger increase of around $40/tonne for its fresh contract discussions.

Acetic acid buyers deem the new prices too high and are preferring to take a wait-and-see stance on the market.

In the key import market of India, demand was still weak, a local trader said.

Offers are quoted at around $430-440/tonne CFR (cost and freight) India.

“I’m not sure if the bullish sentiment is sustainable and I don’t think any deals could be concluded at this level,” said the trader. - ICIS