FocusAsia MMA prices to stay stable-to-firm, arbitrage seen widening

04 April 2011 09:23  [Source: ICIS news]

SINGAPORE (ICIS)--Asian methyl methacrylate (MMA) prices are expected to stay stable-to-firm on strong demand and tight supply, while the arbitrage window to Europe and the US may widen, market players said on Monday.

Asian MMA prices were assessed at $2,420-2,480/tonne CFR (cost & freight) southeast (SE) Asia on 1 April for cargoes of 500 tonnes or more, up by $20-30/tonne week on week.

Spot prices for cargoes of up to 500 tonnes were $30/tonne firmer at the high end of the range from a week ago at $2,550-2,630/tonne CFR SE Asia, ICIS data showed.

Producers, traders and buyers told ICIS that the uptrend came in the wake of recent nominations for $50-100/tonne (€35-70/tonne) hikes for April cargoes that have found acceptance in the market.

Producers had cited expectations of stronger downstream demand, higher raw material costs and tightened supply due to impending turnarounds as reasons for the price adjustments.

Several producers also said they are optimistic that the growth of demand from the downstream polymethyl methacrylate (PMMA) sector, coupled with the uncertainty of future MMA production rates in Japan, could help them to recoup their margins.

As such, most producers said they are also mulling another round of $50-100/tonne hikes for May.

Additionally, market players said the gap between Asian MMA prices and those in the US and Europe is expanding, with some buyers in the US willing to purchase cargoes at approximately $200-250/tonne more than Asian prices.

This has further boosted producers' resolve to increase prices in Asia, they said.

The arbitrage window between Asia and those two regions could widen as well, players said, adding that some sellers are increasingly looking to sell more cargoes outside of Asia for better netbacks.

Several Asian market participants told ICIS that they received buying enquiries from US buyers during a recent major petrochemical conference that was held in the US.

“US buyers were willing to pay $2,600/tonne FOB (free on board) Asia for bulk cargoes [of more than 500 tonnes], which is a whopping $200-250/tonne higher than Asian prices,” said an Asian trader.

“After factoring in the current high freight rates at $250/tonne, it would equate to almost $2,850/tonne CFR US,” said the trader.

Freight rates within Asia were usually at $50/tonne and below, he added.

“Customers from Turkey are also increasingly fishing around in Asia to look for MMA,” said a source from a major MMA producer.

Furthermore, some market players said the current export prices to India are very attractive, as the country relies largely on imports to meet its domestic demand, which generally comes from the paint industry.

As a result, some market participants said they were concerned that this potential outflow of Asian material could exacerbate the already tight supply in this region and exert further upward pressure on MMA prices in the coming months.

However, others said there will be additional capacity coming on line in Asia, with the start-up of Asahi Kasei’s 70,000 tonne/year joint venture MMA plant in Map Ta Phut, Thailand, at around the middle of this year.

“It’s too early to say, we have only just settled April prices,” said a buyer.

($1 = €0.70)

For more on methyl methacrylate, visit ICIS chemical intelligence
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By: Junie Lin

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