Europe Q3 PMMA contracts down on lower demand, feedstock costs

10 August 2012 23:59  [Source: ICIS news]

LONDON (ICIS)--European polymethyl methacrylate (PMMA) third-quarter contracts decreased by €0.07-0.08/kg from the previous quarter, on lower feedstock costs and reduced buying interest, sources said on Friday.

Contracts settled at €3.09-3.11/kg ($3.81-3.84/kg) on a free delivered (FD) northwest Europe (NWE) basis. These prices are understood to be on a gross basis.

Settlements varied greatly; some contracts decreased by €0.07-0.08/kg, and by more than €0.13/kg, while others rolled over and some were agreed at an increase of around €0.08-0.09/kg.

Two producers confirmed that all of their contracts for the quarter had now been concluded, while another producer said it had more than 50% of its agreements outstanding, with the remainder to settle once players return to business after holidays.

Weaker demand, lower feedstock prices, market anxiety stemming from macroeconomic troubles, and slower offtake during the summer holiday period, pushed prices down. Buying interest is below levels seen in the same period last year.

Feedstock methyl methacrylate (MMA) third-quarter contracts were agreed down by €120-140/tonne, because of reduced feedstock costs and softer demand.

Offtake from January until the end of May was healthy and better than had been expected, but producers saw a decrease in demand, especially from the automotive sector. "July was more difficult. It was the first month where we could see some market reduction. There is a lot of hesitation."

“Demand for sheets is softening,” one PMMA consumer said. “The further south in Europe you go, the worse it is. Volumes really have gone down.”

“Extruded sheet demand has been declining. Demand came down in June and July, but it is now steady," a producer said. The expectation for September is that demand will return to the levels seen before the summer holidays. "Hopefully it will pick up in September when people are back from holidays and they are restocking."

“It’s a typical August,” another producer said. “Some plants are closed. As usual, it’s slower than May and June.”

Availability is good, with sources describing the market as “well balanced”. There are few imports coming into the region, largely owing to the weaker euro versus the US dollar.

Looking ahead, however, the market could face increases because of the rise in the August feedstock propylene contract.

An upstream MMA producer said negotiations this month were difficult and slow as buyers are aiming for decreases: "It takes weeks for things to percolate through the market. The reality is that we will need this price increase [on MMA August contracts] and it will happen ... somehow."

PMMA is an acrylic polymer that has high ultraviolet (UV) resistance and is available as resin or sheet. About two-thirds of consumption is in sheets produced by extrusion or casting, while the remainder is moulded into various shapes. PMMA's primary use is in car headlamps and taillights. The second-largest use is in construction (pool and sanitary ware, architectural fittings), and glazing/signage.

($1 = €0.81)

By: Helena Strathearn
+44 208 652 3214

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