Weak Shoe Demand Halts Pricey Asia Eva


by alexda - Date: 2008-09-05 - Word Count: 443 Share This!

SINGAPORE (ICIS news)--Asian ethylene vinyl acetate (EVA) with 18% VA content prices have fallen 8.5-14% from July highs due to resistance from China and India's downstream footwear industries amid slowing global economies, producers and end-users said on Thursday.

The product hit record highs of around $2,460/tonne CFR (cost and freight) China, and $2,505/tonne CFR South Asia in July.

When expected pent-up post-Beijing Olympics demand failed to materialise this month, some producers dropped September prices of 18% VA content EVA cargoes in China by 8.5% to $2,200-2,300/tonne CFR China amid mounting inventory pressure.

This represented the first price decline in two years. 

Record high EVA prices amid earlier robust demand from the downstream footwear sector and rising labour costs in China contributed to the demise of numerous small- and medium-scale footwear factories, a Taiwan-based EVA producer said.

September business to South Asia was also concluded lower by around 14% at $2,130-2,180/tonne CFR India, reflecting a $150-200/tonne week-on-week loss.

"The India market is generally the lowest priced market in Asia if demand in China is poor. So some suppliers have to sell at this price," a Korea-based producer said.

He added that they have not decided if they want to sell at lower prices to South Asia to keep their market share.

"Margins are there but it is so difficult to conclude deals," a southeast Asia-based producer said, adding that he was avoiding the South Asian market, "because most buyers had no idea what price to buy at and there are stocks still stuck at the ports." 

"Inventories are building up but it is still manageable. We hope demand will return in October," he added.

Meanwhile, India-based converters had been turning to substitutes or additives in their footwear manufacturing processes in the wake of skyrocketing EVA prices.

"There is not much demand now although it is approaching the end of the monsoon season," an official from a local footwear manufacturer said.

"There has been product line shifts and EVA prices had already seen very high levels so prices should normalise now that crude values have come down," he added.

While the industry may have seen its best days in the footwear application sector, it was still far from doom and gloom for EVA makers as healthy margins in the higher VA content EVA market remained healthy.

Several northeast Asia-based EVA producers have adjusted production ratios at their plants to that of higher 28% VA content material - which goes into the hotmelt adhesives and cable and wire applications - owing to recent global supply shortages.

Others eyed a slice of the growing market for 30-33% VA content EVA for solar panel applications.

Major EVA producers in Asia include Formosa Plastics Corp, Hanwha Chemical Corp, Lotte Daesan Petrochemical, The Polyolefin Company, TPI Polene and YPC BASF.


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