More than positive elections outcome required to uplift demand for VAM in India – 22 Apr 2014

The demand for VAM has been weak to moderate across major trading hubs in India. As the Indian market is completely import dependent to fulfill demand, this review provides a comprehensive overview of the price trend within the country and the international factors which have impacted the Indian markets.

In the last market review on 27th February, 2014, Indianpetrochem highlighted impact of international turnarounds in US, Middle East and Europe which resulted in short supply internationally spiking the Asian booking prices to all time highs. Around that time, the the bulk price for VAM spiked to Rs. 84 per kg Ex-Mumbai, exclusive of all taxes.

Since then, based on this international cue, the bulk price for the chemical hasn't dipped and been on rise week on week, across major trading hubs in India. In the second week of March, the prices Ex- Kandla reached to Rs. 100 per kg, exclusive of taxes. Thereon, the prices never looked back to this range and the bulk prices reached Rs. 105 per kg Ex- Kandla and Rs.106 per kg Ex- Mumbai by the third week of March, and Rs. 109 per kg Ex-Kandla and Rs.111 per kg Ex- Mumbai by the fourth and last week of March.

In April as well, this uptrend continued, where the bulk prices were Rs. 112 per kg Ex- Kandla and Rs. 111 per kg Ex- Mumbai, all prices are exclusive of all taxes. However, the prices haven't stabilized at this range, eventually a drop in price was noted within this week and last week whereby the bulk price for the chemical is around at Rs. 106 per kg Ex- Mumbai and Rs. 105 per kg Ex- Kandla, all prices are exclusive of all taxes.

While most traders blame the political uncertainty (due to the upcoming elections) within the country to sluggish demand trend for most chemicals/solvents. The situation is contrary for VAM, whereby most buyers are unwilling to purchase the chemical at current pricing levels.

"The chemical which usually was selling at the range of Rs. 60- 70 per kg has reached trading levels greater than Rs. 100 per kg (all prices are exclusive of all taxes).Thereby, nobody is willing to buy the chemical at current price, unless there is a major price correction" a prominent importer informed the website.

Indianpetrochem gathers from various sources that presently the import shipment for VAM coming into the country is within the range of Rs.70-75 per kg (exclusive of custom duty and handling charges). 
 

It is speculated by a set of market participants that the higher bulk price range will maintain for the chemical in the short to medium term; as the spike in Asian contract price during the month of February and March will continue to impact the present landing cost for the chemical, which will be on a higher side assuming these shipments were booked a month or two ago.

However, noting the current lull in demand at current trading range, it is also speculated that a price correction in bulk prices will most likely take place due to very little off takes from the buyer end, hence some of the regular, major imports would most probably take a short term hit in margins in order to maintain demand, presuming the international turnaround situation is temporary.

Ultimately, there is not denying that a major price revision for the chemical will mainly drive the demand for the chemical in the country not just positive election results