Vinyl acetate monomer appears on track to have a stronger year in 2017, with acetic acid and methanol pricing showing potential for improved margins next year, Celanese CEO Mark Rohr said Tuesday.
Pricing in VAM, AA and methanol has seen strengthening recently, but the depressed nature of pricing for much of this year will largely delay the impact until next year, Rohr said in a conference call to discuss third-quarter results.
"Margins have been so low that it's a modest impact so far," Rohr said, describing the expected increases as "a 2016-versus-2017 story."
An expected addition of 3 million mt/year of methanol consumption from new methanol-to-olefins plants in China over the next year will apply pressure to methanol pricing as higher coal pricing has, Rohr said. Coal pricing can impact methanol pricing, particularly in China, as many plants in the country use coal as a feedstock.
The VAM market has shown signs of tightness early in the fourth quarter, Rohr said. That has fostered expectations for a stronger 2017 in the VAM market after an initial weakening at the end of the traditional summer coatings season.
Lower acetic acid and derivatives pricing in the third quarter created obstacles for the company, with Celanese pointing to a softer China market and weaker methanol pricing as drivers behind those factors.
"Utilization rates in the acetyl chain remain historically low, particularly in China, and growth in Europe and North America has been modest," Rohr said.
US spot methanol pricing averaged 67.53 cents/gal FOB USG in the third quarter, down 27% from an average of 92.86 cents/gal FOB USG in the third quarter of 2015, according to S&P Global Platts data.
AA export pricing averaged $525/mt FOB USG in Q3, down 16% from $629.58/mt FOB USG in Q3 2015, and VAM export pricing averaged $872.83/mt FOB USG, down 13% from $1,009.16/mt FOB USG in Q3 2015, Platts data showed.
