On May 17, Dow declared force majeure for Vinyl Acetate Monomer (VAM) globally, with associated impact to select VAM-based emulsions in North America and select acetic acid-dependent products in Dow’s North America and Latin America Industrial Solutions portfolio. Acetic acid is an ingredient in producing polyester. A force majeure is an unforeseeable circumstance that prevents the fulfilling of a contract.
“These actions were taken in response to production issues beyond Dow’s reasonable control affecting an external supplier of raw material,” Dow said. “At this time, Dow estimates this force majeure event will prevent Dow from supplying VAM, and producing products dependent on VAM and/or its key raw material, in quantities required to meet contractual commitments for approximately two months.”
Dow said the force majeure would last “approximately two months.” The company added that it is “committed to providing timely updates to affected customers.”
ICIS News reported that Dow’s declaration came about after BP Chemical’s force majeure at an acetic acid plant in Texas in late April. BP said in its April force majeure statement, reported by ICIS and other media outlets, that all discretionary sales of acetic acid at the plant had been terminated. The force majeure stemmed from an expected delay in repairs needed in critical equipment by the plant’s carbon monoxide feedstock supplier, according to BP.
According to Dow’s website, VAM is an essential chemical building block used in a wide variety of industrial and consumer products. VAM is a key ingredient in emulsion polymers, resins and intermediates used in paints, adhesives, coatings, textiles, wire and cable polyethylene compounds, laminated safety glass, packaging, automotive plastic fuel tanks and acrylic fibers.
ICIS reported that in the week ended May 18, spot prices of ethylene-based VAM across Asia rose between $10 and $15 and tone, the highest levels since 2014. Polyester prices has been elevated going into this latest event. The U.S. Bureau of Labor Statistics’ Producer Price Index for April showed the synthetic fiber prices has risen 5.4% from March to 128.4 and was up from 122.9 in April 2017.
Stein Fibers Ltd. said on June 1 increased the price of all polyester staple fibers produced at its U.S. manufacturing sites by 3 cents a pound. Stein Fibers wrote in a letter to customers posted on its website that “The virgin PET polymer chain continues to face significant rising costs. This increased price pressure pushes demand higher on recycled PET raw materials due to non-traditional industries entering the recycled PET market.”
This followed a 5 cents a pound increase on due to what the company said was an increase in recycled raw material prices stemming “significantly rising costs in the virgin polymer chain.” Stein Fibers said it is one of the largest suppliers and producers of polyester fiberfill and non-woven fibers in North America, with annual shipments exceeding 400 million pounds.