This week the price of VAM (Vinyl Acetate Monomer) in domestic markets have spiked based on international price trend. India is completely import dependent to fulfill its demand for the chemical , which is mainly used in adhesives and manufacturing other chemical intermediaries. Indianpetrochem surveyed the market sentiment for the chemical and tried to understand if this price hike is timed well to the country.
VAM (Vinyl Acetate Monomer) prices in international markets have increased substantially due to turnarounds in the US, Middle East and European markets, this has resulted in considerable supply shortage in the western markets. In order to fill the supply constrains, European markets off late have been importing the chemical from Asia; this has consequentially increased the price for the chemical due to greater logistic costs which has been passed to the buyers in these market.
Thereby, the spot prices for VAM has increased in the Asian region, which has led to a domino effect on the price for the chemical in India.
Spot prices of VAM in Mumbai market fluctuated within the range of Rs. 82 - 85 per kg exclusive of VAT and excise (sold in drums) last week, based on Indianpetrochem sources. This week, however, the spot prices have been trading at a higher range of Rs.90-92 per kg exclusive of VAT and excise (sold in drums) in Mumbai, while the current bulk price for the chemical is at Rs. 84 per kg exclusive of VAT and Excise (sold in tankers).
Most traders in the market blame this price hike to the the rising Asian benchmark prices for the chemical.
Indianpetrochem spoke to some traders and understood that there isn't a supply shortage for the chemical in the country, as it is in Europe. Most of the importers have long-term supply contracts with Asian manufacturers with a contract price based on a formula indicative of the latest international booking price.
In line with this, a trader told the website that "The spike in international VAM prices have been fairly recent, ideally, this should have impacted the Indian market much later, within 15 days or so when the expensive cargos reached the Indian shore. However, this hasn't been the case, the prices have almost immediately increased in the Indian market without any immediate market dynamics impacting the price".
For VAM, India is completely dependent on imports from countries like Singapore, Taiwan, Saudi Arabia, etc. Pidilite was previously manufacturing VAM in the country, however, the company has ceased its plant operations since the past fivers years or so. The website tried to get a comment from the company about this price hike implication on end user segments (mainly adhesives), but they declined to comment on this matter.
Overall, it would be interesting to observe how and when the price of VAM stabilizes in the country in the near future.
By Ntasha Berry
ntasha.berry@indianpetro.com
VAM (Vinyl Acetate Monomer) prices in international markets have increased substantially due to turnarounds in the US, Middle East and European markets, this has resulted in considerable supply shortage in the western markets. In order to fill the supply constrains, European markets off late have been importing the chemical from Asia; this has consequentially increased the price for the chemical due to greater logistic costs which has been passed to the buyers in these market.
Thereby, the spot prices for VAM has increased in the Asian region, which has led to a domino effect on the price for the chemical in India.
Spot prices of VAM in Mumbai market fluctuated within the range of Rs. 82 - 85 per kg exclusive of VAT and excise (sold in drums) last week, based on Indianpetrochem sources. This week, however, the spot prices have been trading at a higher range of Rs.90-92 per kg exclusive of VAT and excise (sold in drums) in Mumbai, while the current bulk price for the chemical is at Rs. 84 per kg exclusive of VAT and Excise (sold in tankers).
Most traders in the market blame this price hike to the the rising Asian benchmark prices for the chemical.
Indianpetrochem spoke to some traders and understood that there isn't a supply shortage for the chemical in the country, as it is in Europe. Most of the importers have long-term supply contracts with Asian manufacturers with a contract price based on a formula indicative of the latest international booking price.
In line with this, a trader told the website that "The spike in international VAM prices have been fairly recent, ideally, this should have impacted the Indian market much later, within 15 days or so when the expensive cargos reached the Indian shore. However, this hasn't been the case, the prices have almost immediately increased in the Indian market without any immediate market dynamics impacting the price".
For VAM, India is completely dependent on imports from countries like Singapore, Taiwan, Saudi Arabia, etc. Pidilite was previously manufacturing VAM in the country, however, the company has ceased its plant operations since the past fivers years or so. The website tried to get a comment from the company about this price hike implication on end user segments (mainly adhesives), but they declined to comment on this matter.
Overall, it would be interesting to observe how and when the price of VAM stabilizes in the country in the near future.
By Ntasha Berry
ntasha.berry@indianpetro.com
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