FocusMTBE costs squeeze Asia MMA makers

29 April 2008 04:26  [Source: ICIS news]

By Anu Agarwal

SINGAPORE (ICIS news)--Surging feedstock methyl tertiary butyl ether (MTBE) prices are squeezing the margins of some of Asian methyl methacrylate (MMA) makers, producers and traders said on Tuesday.

MTBE prices have increased nearly 18% since the start of this year and jumped from $890/tonne (€570/tonne) FOB (free on board) Singapore to $1,050/tonne on the back of spiralling crude and gasoline values.

MMA production costs at MTBE based units have jumped as a result, a southeast Asian MMA trader said.

While MTBE based producers are seeking MMA prices at around $2,100-2,200/tonne CFR (cost and freight) SE (southeast) Asia, buyers are only willing to pay around $1,950-2,000/tonne for isotank cargoes, the trader said.

Gasoline blending accounts for the majority use of MTBE and closely affests the price of the latter.

Chemical usage accounts for a smaller part of MTBE use, said a source at Singapore’s Sumitomo Chemical. The company is the region’s largest MMA producer based on this technology – where MTBE is converted to isobutylene before the production of MMA.

Sumitomo Chemical runs three MMA plants with a combined capacity of  223,000 tonnes/year in Singapore.

Sumitomo has also licenced this technology to Korea’s LG MMA, which runs a 100,000 tonne/year MMA plant in Yeosu, South Korea.

MMA prices have been under pressure due to the recent capacity additions in Asia that has kept the market balanced-to-long, other MMA traders in the region said.

The expected startup of Lucite’s 120,000 tonne/year new ethylene based MMA plant in Asia in the second half of this year is also likely to keep supply ample and competition intense in the sector, regional buyers said.

Other MMA producers in the region like Lucite in China and Formosa Plastics in Taiwan use the acetone cyanohydrin (ACH) technology with acetone and hydrogen cyanide as the feedstocks.

MMA is used to produce the polymer – PMMA (poly methyl methacrylate)  - which is used for casting and moulding applications. The other big and growing use is in transparent plastics applications like LCD screens for TVs and computers monitors.

($1 = €0.64)

By: Anu Agarwal
+65 6780 4359

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