FocusAsia MMA may extend gains; plant shutdowns to squeeze supply

28 June 2010 07:48  [Source: ICIS news]

By Junie Lin

SINGAPORE (ICIS news)--Asian methyl methacrylate (MMA) prices could further strengthen, with the current tight supply likely to be aggravated by scheduled plant turnarounds in the next two months, market sources said on Monday.

A number of regional sellers had announced last week a price hike of between $50-100/tonne (€40.5-81/tonne) for isotank and bulk cargoes for July.

Spot MMA prices were assessed at $2,310-2,390/tonne CFR (cost and freight) SE (southeast) Asia for cargoes up to 500 tonnes, and at $2,240-2,280/tonne CFR SE Asia for bulk cargoes last week, according to ICIS pricing.

MMA is used to produce polymethyl methacrylate (PMMA) polymer, cast sheets and acrylic resins for coatings and emulsions with applications in various industries - from optoelectronics to automotive.

Only the optical grade PMMA makers could take the current high prices as they could pass on the costs to clients, said a source.

“The emulsion makers are suffering [from poor margins],” the source said, adding that cast sheet makers were the worst-hit, with losses now running at $200/tonne.

Demand for MMA continued to be driven by strong take-up of optical grade PMMA for use in flat-screen televisions based on light-emitting diode (LED) technology. The sheets used in LED TVs are partly MMA-based cast sheets and partly extrusion sheets based on PMMA.

Regional PMMA prices for general purpose (GP) grade hit an 18-month high of $2,730-$2,850/tonne CFR SE Asia and $2,650-2,710/tonne CFR China on 24 June.

Southeast Asia and China GP grade PMMA prices were up $100-150/tonne week on week due to higher deals and higher buy-sell indications amid robust demand and tight supply.

GP grade PMMA has applications in illuminated signs and bathtubs, among others.

Scheduled MMA plant turnarounds in July and August would likely push the prices higher as these would exacerbate the current supply tightness in Asia, sellers said.

Sumitomo Chemical would be shutting down its 80,000 tonne/year No 2 MMA line in Singapore in end July for repair. The line had been operating at about 90% due to technical problems.

Meanwhile, its 53,000 tonne/year No 1 line in Jurong Island, Singapore would be shut for six weeks from mid July for scheduled maintenance.

Sumitomo Chemical’s 90,000 tonne/year No 3 line at the same site was operating at full capacity.

 “We are also increasing $50/tonne for isotank cargo. The increase is based on strong demand and supply fundamentals,” said a company source.

South Korean producer LG-MMA also plans to shut its 76,000 tonne/year MMA line at Yeosu next month for a 25-day catalyst change.

LG-MMA operates two other MMA lines at the same site, with a total capacity of 100,000 tonnes/year.

Mitsui Chemicals, meanwhile, would only restart its 40,000 tonne/year plant in Sakai, Osaka Prefecture, on 25 July. The plant was taken off line on 10 June for a catalyst change.

“We may be increasing our domestic offer price by Japanese yen (Y) 25/kg ($0.27/kg) from end June due to tight supply,” a company source said.

Thai MMA Co was set to shut its 90,000 tonne/year MMA plant in Mab Ta Phut, Thailand for 10 days of maintenance from 7 July, said a company source.

The company had less than 500 tonnes of inventories, said the source.

“It’s only logical that we are going to increase our offer price during the shutdown,” he added.

Thai MMA is a joint venture between Japan's Mitsubishi Rayon Co (MRC), one of the largest MMA producers in Asia, and Thailand's Siam Cement Group (SCG).

In China, MRC subsidiary Huizhou MMA Co would be shutting its 90,000 tonne/year MMA plant from 7 August for two weeks of scheduled maintenance.

Further MMA price increases, however, would likely be smaller in the third quarter compared to the second quarter given the lesser number of plant shutdowns, according to some market players.

But the tightness in overall MMA supply that was keeping prices firm would only ease when two new plants in Thailand come on stream next year, they added.

Asahi PTT’s 70,000 tonne/year unit in Mab Ta Phut, Thailand, was expected to begin commercial operation in first quarter of 2011, while Thai MMA was hoping to start its new 90,000 tonne/year line at the same location by the end of 2010.

“I think the supply would be slightly better by then,” said a Thai MMA source..

Other Asian MMA producers include Asahi Kasei, Sumitomo Chemical and Formosa Plastics.

($1 = €0.81; $1 = Y89.3)

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By: Junie Lin

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