Acrylic prices in Europe are at historical highs

Strong demand growth meets the biggest supply dilemma in history.

Recently, IHS Markit stated that the continued strong demand for acrylates in the European market, coupled with supply shortages due to large supply disruptions and low imports, will keep acrylates spot prices high for the rest of this year.

In recent months, due to frequent supply problems in Europe and North America, the spot price of acrylic esters has been rising. The prices of raw materials such as 2-ethylhexanoic acid (2-EHA) and butyl acrylate (BA) in Europe have become the highest in the world. This also makes it a major target for potential exporters. However, as with many chemicals this year, despite the open arbitrage window, logistics and supply chain challenges, such as high freight rates and low availability, will continue to hinder the free flow of acrylic products into the region.

According to the latest "Global Acrylic and Super Absorbent Resins Monthly Report" released by IHS Markit, in June, the spot freight index for trade routes from Asia to Europe exceeded US$10,000 per 40 foot equivalent unit (FEU). It is reported that the freight rate for the route from Asia to Northern Europe is close to US$14,000 to US$15,000 per 40-foot equivalent unit (FEU). The report pointed out that, in some cases, the spot freight for tank containers is even higher.

"Since the beginning of this year, the European acrylic ester market has been in severe volatility, and it will not appear to return to a more stable and normal state." The report pointed out. In general, the supply recovery is showing signs, but many new problems are also plagued by the market. The situation of acrylate is still unstable. For example, planned overhaul may have serious consequences.

According to the report, the demand for acrylates is surprisingly strong. Since the new crown pneumonia epidemic first swept Europe, paint and coating manufacturers have continued to report record sales, mainly due to the continued growth in demand in the home improvement industry. Industrial Coatings industry demand is also catching up recently. The performance of automotive coatings is much better than last year, and even the sluggish demand for aerospace coatings has shown signs of recovery. The entire value chain has been in a marginal supply, and some players in the industry will be eager to build a certain level of safety stock as soon as possible.

Earlier this year, the two major acrylate producers in Europe, the Middle East and Africa had stopped operations. BASF’s 200,000-ton/year plant in Ludwigshafen, Germany, and Sasol’s plant in Sasolburg, South Africa were suspended due to failures. Announced force majeure. In Europe, BASF's Butyl Acrylate and butanol production accounts for half of Europe. In this case, the long-distance supply chain is usually activated. However, due to shipping problems, imports from Asia and the United States could not be delivered (the effect of the winter storm in the United States in February and the grounding of the Suez Canal in March caused a blockage of the route). In order to produce acrylates, manufacturers need raw materials including acrylic acid and carbonyl alcohols, such as butanol or 2-ethylhexyl acrylate, but the supply of these raw materials is also very tight. At present, the tight supply situation is beginning to ease, and BASF has recently begun to increase the production load rate in Ludwigshafen. Sasol also lifted the force majeure in June. However, after Dow Chemical shut down its 60,000-ton/year acrylic acid and butyl acrylate plant in Buren, Germany in September last year, this has caused structural tensions in acrylates in the region this year.

As there is no new planned production capacity, acrylic esters need to be imported. However, few acrylate consumers in Europe can obtain supplies from Asia alone, instead relying on traders. Traders said that buying goods from China at a price of US$2,400 FOB (approximately US$3100; CIF, Europe) is higher than ever before. Currently, they are still importing from Asia, but they are only trying to buy.

In the second half of the year, Europe is expected to have multiple installations undergoing planned maintenance and demand will remain high. The potential impact of the U.S. Gulf of Mexico hurricane or the Suez Canal-style "black swan" event on production installations has caused prices to soar again. "It is expected that spot prices in Europe will drop slightly, and contract prices will eventually drop with it. However, prices for the rest of this year will remain at historical highs. The profit margins of producers will be much better than long-term levels." IHS Markit Global Acrylics, Acrylics And Dennis Pushin, business director of methyl methacrylate, said.