FocusEurope's MMA buyers seek Q4 clarity

27 September 2007 16:36  [Source: ICIS news]

LONDON (ICIS news)--European methyl methacrylate (MMA) buyers were looking for clarity on Thursday as pre-European Petrochemicals Association (EPCA) conference talk reportedly threw up a variety of fourth-quarter contract scenarios.


Buyers said offers in the market for October and fourth-quarter volumes were contradictory.


“We are hearing two voices in the market,” said a major European buyer.  “There are those that want to increase their market share and those who want to push for increases.  There is one producer talking about a rollover and another seller who is even contemplating decreases. We are waiting to get all the prices in and then consider our next move.”


While buyers saw their options as varied, the majority of producers were clearer in their tone.


Two major European sellers announced last week that they were to seek €80/tonne ($112/tonne) increases on current contract pricing for the fourth quarter.


“Several European producers are facing production issues in September and October and this, alongside existing tightness in the market and volatile feedstocks, had caused us to make the increase,” said a producer source at the time. “We are going to be very firm on this number.”


“Prices are going up. That’s a fact,” said another producer source on Thursday. “The question is not of whether we will see increases this quarter, but of the magnitude of the increases.”


A source at Lucite confirmed on Tuesday that its 200,000 tonne/year MMA facility in Billingham, UK, had been shut down for maintenance late last week. This, alongside upstream raw material methanol, propylene and acetone costs, was seen as being central to fourth-quarter negotiations.


The question of market share could be a major factor in limiting fourth-quarter increases, as negotiations at this time of the year were also used for positioning into the new year, a producer source said. 


Buyers were more likely to remain loyal to existing contract partners if their margin loss was kept to a minimum, the producer added, a sentiment echoed by many buyers.  


“There is definitely an element of, if you hurt me now, I’ll find a way to hurt you back later,” said the producer source, adding that many buyers would include discussions for 2008 in their negotiations. 


On this basis, the producer added, it was better to proceed with caution until the full impact of raw material costs and the Lucite outage were known.


What buyers and sellers did agree on, meanwhile, was the role that next week’s EPCA would play in forming a clearer picture of current market dynamics, as producers, sellers and buyers talked in greater depth on their expectations for the next quarter.


Or, in the words of one player: “It’s going to be an interesting EPCA.”


Major producers of MMA in Europe include Degussa, Lucite and Arkema.

By: Peter Salisbury
+44 20 8652 3214

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