FocusAsia PMMA makers cut output as flat screen TV sales flop

12 December 2008 04:30  [Source: ICIS news]

By Anu Agarwal

SINGAPORE (ICIS news)--Polymethyl methacrylate (PMMA) inventories have been piling up in Asia, forcing producers to slash output as consumers put off purchases of flat screen TVs and computer monitors, said PMMA buyers and sellers on Friday.

Several flat screen TV producers and computer monitor makers in Korea and Taiwan expect annual sales to drop for the first time in 2009 since this technology was introduced in the 1990s, in line with the global economic difficulties.

South Korea’s Samsung, the largest global producer of display screens, had already started reducing output since August on the back of falling sales joining other producers in Korea in Taiwan.

PMMA is one of the key polymers used for making the light guided panels (LGP) for liquid crystal display (LCD) screens for computer monitors and TV screens of sizes up to 22 inches.  The chemical is also one of the polymers which is combined with acrylonitrile butadiene styrene (ABS) to make the housing for flat screen TVs, a segment that grew nearly 30% in 2007.

PMMA inventories in Korea, one of the main producers of the chemical, are very high at this time after electronics giants Samsung and LG Electronics cut production, said a source at a Korean PMMA producer.

“Inventories in Korea are now around 10,000 tonnes,” he estimated.

The problem for many PMMA producers who are backward integrated to feedstock MMA is that if they stop producing PMMA, they will also have to stop MMA production, said another PMMA producer.

MMA is used to make PMMA, transparent acrylonitrile-butadiene-styrene (ABS) and cast sheets. Key end-user industries include automotive, computer monitors, flat screen TVs and construction.

Many PMMA producers in Asia had already reduced operating rates or shut down in the face of the slow demand.

Chimei of Taiwan has been operating its 130,000 tonne/year PMMA plant in Kaohsiung, Taiwan at close to 20-30% since November, and might the shut the plant completely in December, said a company source.

While demand from the LCD TV and computer sector is falling, other buyers are also on the sidelines as PMMA is too expensive, said the source.

“It does not make sense to produce more high cost PMMA especially as feedstock MMA prices are projected to fall sharply in coming months, so we will try and slash our PMMA inventories,” he added.

Global producer Arkema had also shut its 40,000 tonne/year PMMA plant in Korea since 24 November until end of December to draw down inventories.

Other PMMA producers like Mitsubishi Rayon Co were running their 50,000 tonne/year PMMA plants in China at low rates. Sumitomo Chemical in Singapore was planning to bring forward the shutdown at its two 50,000 tonne/year each PMMA facilities from February to the second half of December.

The plants had been running at around 60% of capacity in the past two months.

In China too, some computer distributors like Hangzhou-based Jinfu Computer Sales Co saw PC sales dropped 20-30% in the second half of this year due to the economic crisis, said a company source.

“I assume that PC sales of our company will decline further in the first quarter of next year in light of the worsening economy and shrinking demand. However, the situation may turn better from the second half of 2009,” he added in Mandarin.

Regional prices for general purpose PMMA had dropped nearly 12-14% from September this year to around $2,150-2,200/tonne CFR China according to global chemical market intelligence service ICIS pricing.

Other applications for PMMA include automotive, construction, toys and house wares- all of which were facing unprecedented demand shrinkage.

Competing polymers like polycarbonate (PC) had seen sales dropping by 50% in the past months while ABS import volumes to China were down nearly 21% this year from 2007.

Key PMMA producers in Asia include Chimei, Arkema, LG MMA, Sumitomo Chemical and Mitsubishi Rayon Co.

Dolly Wu, Judith Wang, Liu Xin and Clive Ong contributed to this story

To discuss issues facing the chemical industry go to ICIS connect

By: Anu Agarwal
+65 6780 4359

< previous article(VIDEO - ICIS news Europe Lunchtime Bulletin 3 November 2009)

For the latest chemical news, data and analysis that directly impacts your business sign up for a free trial to ICIS news - the breaking online news service for the global chemical industry.

Get the facts and analysis behind the headlines from our market leading weekly magazine: sign up to a free trial to ICIS Chemical Business.

Printer Friendly