Indian VAM Market Faces Pressure from Falling Feedstock Prices; Demand Expected to Pick Up
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VAM prices in India have fallen due to weak demand and increased inventories. Sluggish activity during October's festive season further strained market sentiment. However, demand is likely to rebound by mid-November, supported by the paints and coatings sector's seasonal boost.
Current Price Dynamics of Vinyl Acetate Monomer (VAM)
Key Takeaways:
- Price Trends: Domestic Vinyl Acetate Monomer (VAM) prices dropped ₹1/kg to ₹68/kg (ex-Kandla) and ₹69/kg (ex-Hazira) due to weak sentiment and lower feedstock costs.
- Supply & Demand: Slowed liquidation amid festive holidays and reduced demand in key sectors like paints and adhesives caused bearish market sentiment.
- Market Optimism: Demand may rebound by mid-November, driven by seasonal upticks in paints and coatings.
VAM Current Price
- In the domestic market, VAM prices have recorded a decline of ₹1/kg, now quoted at ₹68/kg ex-Kandla and ₹69/kg ex-Hazira on 60-day payment terms. Traders are offering mixed quotes, with prices around ₹68.50/kg ex-Kandla under similar 60-day credit conditions.
- On a week-on-week basis, VAM prices have decreased by approximately ₹2/kg, driven by weak market sentiments, reduced replacement stock levels, and a significant drop in feedstock prices.
Supply and Demand Trends in India’s VAM Market
- Throughout October 2024, VAM inventories in India have increased due to continuous vessel arrivals. However, liquidation activities have slowed, especially during the Navaratri and Diwali holiday period.
- Given that India's VAM demand is fully dependent on imports, the market sentiment has turned bearish, with bulk buyers refraining from purchases amid ongoing price corrections in the Asian benchmark CFR China VAM prices.
- The downward trend in acetic acid feedstock prices across Asia has added an element of uncertainty to the VAM market outlook, according to a key bulk consumer. Demand from major sectors such as paints, coatings, adhesives, Polyvinyl Alcohol (PVA), Vinyl Acetate Ethylene (VAE), and ethylene-vinyl alcohol remained subdued throughout October.
- However, there is an expectation of robust trading activity from mid-November as seasonal demand from the paints and coatings sector is set to resume.
- Market players are optimistic about a potential rise in demand from the paints, coatings, and adhesives segments, which could lead to an improvement in trading sentiment, as highlighted by a leading importer.
- India’s current demand for VAM is estimated at around 15 kt per month.
Market News: Global Market Indicators and Feedstock Updates
- In the global market, the upstream crude oil benchmark WTI prices saw a 1.08% decline, settling at $67.95 per barrel.
- FOB Singapore naphtha prices are currently pegged at $625/MT, while natural gas prices fell by 2.60%, reaching $2.71.
- In related feedstocks, CFR China methanol prices have decreased by $2, bringing them to $289/MT, while FOB China acetic acid prices stand at $325/MT.
Expert Opinion: Preparing for Seasonal Demand Recovery
Domestic VAM prices are expected to remain volatile in the near term as buyer activity is likely to increase with paint and coating manufacturers gearing up for seasonal demand. Buyers are advised to explore inventory management strategies to mitigate potential price fluctuations and capitalize on market opportunities.
Daily Market Report
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