28 May 2012 00:00 [Source: ICB]
Nearly all methyl methacrylate (MMA) is polymerized to make homopolymers and copolymers. The largest application is in the casting, molding or extrusion of polymethyl methacrylate (PMMA) or modified polymers.
MMA polymers and copolymers have a major application in surface coatings and impregnation resins, where they give colorfastness and weather resistance to latex paints, lacquer resins and stoving enamels.
Since most production of MMA in the US market goes into the coatings industry, followed by cast and acrylic sheet uses, demand for MMA is strongly tied to the construction market.
In late March and early April 2012, the US coatings market saw a sharp spike in demand, as weather across the country was warmer than normal.
This led to some hopes that the overall coatings season would be robust through July and August, but demand from this market has slowed. Several market players speculate that the US coatings season started earlier than normal and that it is likely to end earlier than normal.
Others attribute the slowdown to high prices, as buyers built inventories of less expensive material and are relying on those until MMA prices fall.
With the US construction sector still idling, demand for cast and acrylic sheet applications has been steady to slightly higher, but is well below peak pre-2008 years.
An increase in demand for MMA from the growing South American market, mostly for paints and consumer electronics applications, spurred US-based Lucite International to decide to restart its 155,000 tonne/year Beaumont, Texas, facility by the summer. The company had mothballed the facility in the fourth quarter of 2008.
Also, Germany-based Evonik has been working to expand its capacity at its 150,000 tonne/year MMA plant in Fortier, Louisiana. No new capacity estimates have been made available. Supply has been tight because of the work needed for expansion.
US May MMA prices recently settled at $1.24-1.30/lb ($2,734-2,866/tonne, €2,160-2,264/tonne) on an FD (free delivered) basis.
This represented a tightening of prices, as the US average price was steady from April's midpoint of $1.27/lb FD. US MMA prices are expected to fall in June and July, tracking an overall weaker commodities market.
Feedstock US barge acetone contract prices for May have not been set, but are expected to drop by 10-15 cents/lb ($220-331/tonne), which could push MMA prices lower by a similar amount.
However, demand for MMA is expected to remain healthy, keeping a floor on how far prices will fall.
Several buyers added that they have started receiving offers on Asia material, which is cheap enough to open an arbitrage window into the US. However, the recent drop in MMA feedstock prices has convinced most buyers to hold off on purchasing Asia material in hopes that US product will bottom out during the summer and fall.
MMA was first produced in the mid-1930s by an acetone cyanohydrin route still used in many plants today.
Acetone and hydrogen cyanide are first reacted to produce acetone cyanohydrin. Sulfuric acid converts the cyanohydrin to methacrylamide sulfate. This is then treated with a methanol/water mixture and heated to form MMA and ammonium bisulfate.
Problems with disposing the bisulfate waste however have driven efforts by Mitsubishi Gas Chemical, Evonik, Lucite and Eastman Chemical to solve waste disposal.
The US MMA market is expected to continue to see growth at 3-5 percentage points above GDP, based on a steadily improving coatings market in the country and the opportunity for strong exports into South America.
Producers and some buyers say demand from the coatings market remains robust, tracking an increase in painting and an improving US construction market. However, several other buyers say painting demand has slipped, but is still higher year on year.
The difference in opinion is expected to keep market players somewhat cautious about where overall sales levels will finish for the US coatings season.
MMA and PMMA remain the preferred material for LED light, flat-screen TV and liquid crystal displays, keeping investment levels in the market healthy.
However, with the US construction market failing to return to pre-recession levels, as well as struggling to post consistent growth, the upside for the coatings market remains slightly limited.
MMA supply is likely to be balanced at best because buyers won't suffer from tightness of feedstock acetone. They will be able to get imported acetone, even as operating rates at domestic phenol-acetone plants are low.
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