Vinyl Acetate Monomer Market Gains Momentum with Rising Prices and Seasonal Demand Uptick

Key Highlights

• Price Surge: Domestic VAM prices increased by ₹2/kg, driven by rising acetic acid costs and strong demand for paints and adhesives.
• Supply Constraints: Limited February shipments due to the Chinese New Year and the INEOS plant shutdown tightened market supply.
• Demand Recovery: Seasonal demand growth in downstream segments like PVA and VAE supported stronger trading activity.
• Local Production Resumes: A leading paint manufacturer resumed VAM-based paint production, reducing import dependency.

VAM Price Trends: Upward Momentum Amid Robust Demand

• Domestic prices for Vinyl Acetate Monomer (VAM) have seen an uptick of ₹2 per kg. The latest pricing details are as follows:
  ₹76.00/kg (Ex-Kandla)
  ₹76.50/kg (Ex-Hazira)
  These rates are based on 60-day payment terms.
• Traders offer even higher prices, with market quotes hovering around ₹77.00/kg (Ex-Kandla) under similar credit conditions.
• On a week-on-week basis, prices have risen by approximately ₹2.5 per kg, primarily driven by robust downstream demand from the paints and adhesives sectors and an increase in feedstock cost, particularly acetic acid.

Supply Constraints: Limited Shipments Drive Market Tightness 

• In December 2024, VAM inventories in India remained high due to regular vessel arrivals. However, shipments scheduled for February are limited owing to the Chinese Lunar New Year holidays and a shutdown at INEOS's VAM plant caused by unfavorable conversion economics. These developments have introduced supply constraints into the market.
• At the same time, demand for VAM from paints, coatings, and adhesives manufacturers has strengthened due to seasonal requirements. India’s VAM market continues to rely heavily on imports.
• In a significant development, a leading paint manufacturer has resumed production of VAE-based paints, becoming the first domestic producer of this material, which is expected to reduce some dependency on imports.
• Replacement costs for importers are likely to rise further, aligned with the ongoing increase in acetic acid prices. Bulk buyers are actively building inventories in anticipation of further price hikes.
• According to a major importer, bullish acetic acid prices in Asia, driven by limited supply and rising acetyl demand, are providing strong support for VAM prices in January and February 2025.
• Demand in downstream segments like Polyvinyl Alcohol (PVA), Vinyl Acetate Ethylene (VAE), and Ethylene-Vinyl Alcohol (EVOH) has shown notable improvement in January 2025 compared to November and December 2024. Seasonal growth has supported a recovery in these sectors.
• Market sentiment remains positive, with expectations of increased trading activity as demand from paints, coatings, and adhesives manufacturers picks up. Additionally, the resumption of domestic VAM production for specific applications has driven a significant upward trend in Indian demand. The revised estimate for India’s monthly VAM demand now stands at approximately 22,000 tonnes.

Global Upstream Market Updates and Their Impact on VAM Prices 

• Global upstream trends have displayed mixed movements:
  1. Crude Oil: WTI prices fell by 0.67%, closing at $68.91 per barrel.
  2. Naphtha: FOB Singapore prices were recorded at $609/MT.
  3. Natural Gas: Prices climbed by 2.04%, reaching $3.65/MMBtu.
  4. Methanol (CFR China): Prices stood at $298/MT.
  5. Acetic Acid (FOB China): Prices were assessed at $325/MT.

Expert Opinion: Navigating Volatility with Strategic Inventory Management

• The Indian VAM market is expected to experience short-term volatility as paint, coating, and adhesive manufacturers scale up production to meet seasonal demand.
• To navigate these fluctuations effectively, buyers are encouraged to adopt strategic inventory management practices. Such measures will enable businesses to mitigate risks associated with price volatility and capitalize on emerging opportunities in the evolving market landscape.