European butyl acetate producers are again struggling to pass on feedstock increase this month and are having to accept declining margins, sources said this week.
Butac is produced from iso-butanol, a propylene derivative, and acetic acid, made from methanol. Usually butac prices are linked to propylene. Propylene contract prices in Europe have been rising for several months, gaining Eur10/mt each month since April.
In June, the propylene contract price was agreed at Eur1,160/mt FD NWE amid tightening availability as crackers were maximizing the use of light feedstocks which yield less C3, butadiene and pygas per each mt of ethylene. Meanwhile, butac prices have remained stable at Eur1,050-1,060/mt FD NWE since the end of March due to sluggish demand.
"There has been enough product around and even a reduction in production during maintenance was not sufficient to tighten the market," a sources said.
Demand is slowly improving, one producer said, adding that there is usually a seasonal uptick in consumption both from the construction and the transport sectors.
While butac production margins have clearly been under pressure, leading to a reduction in run rates, producers had some relief due to a plunge in methanol prices in recent months.
Spot methanol values dropped from near Eur400/mt FOB Rotterdam at the end of February to Eur270-280/mt at the start of June.
In Europe, butac is produced by BASF in Ludwigshafen, Celanese in Frankfurt and Oxea in Marl, Germany, and Ineos Oxide in Antwerp, Belgium.
