FocusChina methyl-A falls to 13-month low on weak downstream demand

26 October 2011 11:48  [Source: ICIS news]

SINGAPORE (ICIS)--The China benchmark price for methyl acrylate (methyl-A) reached a 13-month low on Wednesday and may continue falling, dragged down by slowing demand from the downstream methyl methacrylate (MMA) sector, industry sources said.

Methyl-A was assessed by ICIS at $1,950-2,000/tonne CIF (cost insurance and freight) CMP (China Main Port) to reflect prevailing offers by regional producers.

The price was previously at this level on 6 October last year when it was assessed at $1,920-2,010/tonne.

High inventory levels coupled with weak demand throughout northeast Asia and southeast Asia drove regional producers to aggressively slash offers in October.

One regional producer reported that it could offer spot methyl-A cargoes at $2,000/tonne, down a sharp $150-160/tonne from its offers in September.

“Demand from the downstream MMA sector is so weak, as MMA producers are grappling with high inventories. We have not sold a single MA [methyl-A] cargo in October as there are no requirements,” said the producer.

A second northeast Asian producer shared a similar view.

“MA [methyl-A] demand typically picks up early in the fourth quarter, which is the peak production season for the automotive and construction sector. But this year, the situation is terrible. Both sectors are suffering badly,” said the second regional producer.

In China, the construction sector is hit hard by the government’s tightening monetary policies, Chinese traders said.

Meanwhile, the country’s automotive sector is affected by slower demand from the debt-ridden eurozone, Chinese traders added.

In southeast Asia, both the construction and automotive sector were badly affected by widespread flooding.

In Thailand, the floods have affected a third of all provinces in the country, and have caused the seven industrial hubs in Ayutthaya, Nonthaburi and Pathum Thani provinces in the north of Bangkok to shut.

Thai Honda Manufacturing Co (Thai Honda), Honda's motorcycle and power products production subsidiary in Thailand, said it had suspended motorcycle production since 11 October, and power products production since 6 October.

The automotive industry is an important sector for MMA production, where downstream MMA products like polymethyl methacrylate (PMMA) are used in applications, such as tail lights and speedometers.

A southeast Asian trader predicts that Asian producers will be forced to slash production rates moving into the fourth quarter.

“This is the inevitable scenario as MA [methyl-A] stockpile levels have to be controlled,” said the trader.

By: Quintella Koh
+65 6780 4372

AddThis Social Bookmark Button

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