19 September 2008 04:55 [Source: ICIS news]
By Anu Agarwal
SINGAPORE (ICIS news)--Asian MMA prices have peaked or are close to peaking after relentless increases in the past three months as tight supply looked increasingly balanced out by soft downstream demand, said regional MMA buyers and sellers on Friday.
Prices were currently assessed at $2,500-2,550/tonne cost and freight (CFR) ?xml:namespace>
Sluggish demand from downstream segments like polymethyl methacrylate (PMMA), cast sheets and emulsions was making it difficult to increase prices further, said some sellers.
"Asian MMA values are already much higher than in Europe and [the] US and that also makes it more difficult to get price increases in Asia," said a regional MMA producer.
Asian MMA values climbed around 25% in three months starting June on persistently tight regional supply and an absence of deep-sea cargoes from the US and Europe. Production problems at regional plants like technical issues at Sumitomo Singapore and more recently, a shortage of feedstock hydrogen cyanide (HCN) amid poor operating rates at upstream acrylonitrile (ACN) plants, all added to supply woes in Asia.
But the situation in the downstream markets was getting difficult.
"It’s getting very difficult to raise prices anymore as it is nearly impossible to pass on costs in the downstream PMMA market," said a regional trader.
PMMA sales had dropped a lot and most of the regional PMMA plants were operating at low rates amid weak demand and the inability to pass high MMA costs, said a regional PMMA producer.
Buying sentiment had turned gloomy and higher offers for October were now unlikely to be picked up by buyers, said other traders who added that prices could be rolled over from September.
Cast sheets made from MMA were also facing softening demand and production may have to be reduced by 20% in the fourth quarter amid a deteriorating export market and worsening regional economy, said a Thai cast sheet producer.
Some regional MMA producers however, remained optimistic about a rebound in demand in the fourth quarter.
"It is not very clear if the soft demand is due to several holidays in the region like those for Ramadan and the upcoming week-long National Day holidays in China or due to a real drop in export demand from the US," said a Japanese MMA producer.
The transparent ABS segment, which is used in flat screen TVs, was still doing well and demand for light guided panels for LCD screens might be revived in the fourth quarter, he added.
"MMA prices are not going up but they are not going down in a hurry either", said an Asian trader. There is no additional supply coming into Asia until either Sumitomo Singapore starts up and/or the new facility of Lucite in Singapore starts as expected in November," he added.
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