India's VAM Market Gains Momentum as Downstream Recovery Begins

VAM

06 Dec 20242 Min ReadDaily Market Report

The Indian VAM market is experiencing a rebound, with domestic prices climbing due to increased production activity in key downstream sectors like paints and adhesives. Inventories are being liquidated at a faster pace as manufacturers prepare for seasonal demand. Feedstock costs for methanol and acetic acid, key inputs for VAM production, are rising, prompting bulk buyers to secure supplies early. Globally, mixed trends in energy and feedstock markets are influencing the VAM market outlook.

Key Highlights

Price Increase: Domestic Vinyl Acetate Monomer (VAM) prices rose by ₹2/kg week-on-week, driven by improved demand in paint and adhesive sectors. Current rates are ₹68–₹69/kg.
Demand Surge: Adhesive manufacturers lead inventory liquidation, and bulk buyers stockpile in anticipation of further price hikes amid rising feedstock costs.
Downstream Revival: Seasonal recovery in Polyvinyl Alcohol (PVA), Vinyl Acetate Ethylene (VAE), and adhesives is expected to boost VAM consumption.
Global Influence: Feedstock trends, including a decline in crude oil and methanol prices but stabilization in acetic acid, impact VAM market dynamics.

Rising VAM Prices: A ₹2/kg Weekly Uptick

Domestic VAM prices have seen an increase of ₹1/kg. Currently, prices stand at:
₹68/kg (Ex-Kandla)
₹69/kg (Ex-Hazira)

These rates are applicable under 60-day payment terms.

Traders are offering mixed quotes, with the prevailing market rate at approximately ₹68.50/kg (Ex-Kandla) for similar credit conditions.
On a week-on-week basis, VAM prices have risen by about ₹2/kg. This uptick is attributed to improved production activities, particularly in the paint and adhesive manufacturing sectors.

Chemical Supply and Demand: Adhesives and Paints Drive Demand Growth

In November 2024, VAM inventories in India remained high due to continuous vessel arrivals. However, liquidation activities have gained momentum this week, driven primarily by increased demand from adhesive manufacturers.
India's VAM demand is entirely reliant on imports, and replacement costs are expected to rise as feedstock prices for methanol and acetic acid continue their upward trend. Bulk buyers are actively building inventories, anticipating further price increases.
A prominent importer noted that acetic acid prices in Asia have started recovering, fostering positive sentiment for the VAM market outlook in December 2024.
Downstream sectors such as Polyvinyl Alcohol (PVA), Vinyl Acetate Ethylene (VAE), and Ethylene-Vinyl Alcohol (EVOH) exhibited subdued demand throughout November. However, these sectors are likely to witness a recovery in December as seasonal demand picks up.
Market participants remain optimistic about a surge in trading activities, with the paints, coatings, and adhesives sectors gearing up for increased demand. Currently, India’s monthly VAM demand is estimated at approximately 15,000 tonnes.

Market News: Feedstock Costs and Import Dependency Shape Market Trends

Globally, key feedstock and energy markets have seen mixed trends:

Crude Oil: WTI prices declined by 0.52%, settling at $67.90 per barrel.
Naphtha: FOB Singapore naphtha prices are pegged at $595/MT.
Natural Gas: Prices dropped by 1.64%, reaching $3.02/MMBtu.
Methanol (CFR China): Prices fell by $6 to $294/MT.
Acetic Acid (FOB China): Prices currently stand at $325/MT.

Expert Opinion: Managing Volatility in the Evolving VAM Market

The domestic VAM market is expected to remain volatile in the short term as paint, coating, and adhesive manufacturers ramp up production to meet seasonal demand. To navigate this volatility, buyers are encouraged to adopt strategic inventory management practices. This approach can help mitigate the impact of price fluctuations while maximizing opportunities in the evolving market landscape.