Asia Pacific economies, solar power investments and the shale gas boom are all working together to fuel the vinyl acetate monomer (VAM) market, states a new report by GBI Research. VAM is a raw material used in the production of synthetic rubbers and polymer resins and its main end-uses polyvinyl acetate (PVAc) and ethylene vinyl acetate (EVA) are used to produce paints, adhesives, paper coatings and textile treatments, packaging films and foams. EVA is also used in photovoltaic (PV) applications, and the growth of the solar industry is promoting further growth in the VAM industry.

Growing demand in the VAM market is largely thanks to the Asia Pacific region, in particular China. While demand in developed countries such as Japan has largely stabilised, the large populations and growing economies of emerging countries such as China and India mean that they have substantial consumption potential, reflected in the high growth in Chinese VAM downstream segments, such as PVAc and EVA.

The increasing popularity of shale gas over recent years, particularly in the US, has had an additional positive effect on domestic production of VAM. Crude oil is a major feedstock used for the production of ethylene, which in turn is used for the production of VAM. The percentage of ethane, which represents the VAM stream, is very high in natural gas compared to crude oil or naphtha and the increased availability of shale gas is expected to result in a corresponding rise in the domestic production of ethylene and VAM. This will drive future export prospects, as local demand is currently being met by domestic production.

Global demand for VAM has been increasing steadily over the last ten years, from 4 million tonnes in 2000 to 5 million tonnes in 2011, and demand is expected to grow at a Compound Annual Growth Rate (CAGR) of 4% in the coming years, to reach 7 million tonnes in 2020. The Asia Pacific region accounted for around 60% of global VAM demand in 2011, and a similar trend is expected to continue in the forecast period.