FocusAsia MMA may stabilise after 10% slump; demand stays weak

14 August 2012 06:35  [Source: ICIS news]

By Junie Lin

Asia MMA may stabilise after 10% slump; demand stays weakBRISBANE (ICIS)--Asia’s methyl methacrylate (MMA) prices snapped seven consecutive weeks of declines and may stabilise at current levels as producers attempt to recoup losses even as demand for the material has largely remained dismal, industry sources said on Tuesday.

In the week ended 10 August, bulk MMA cargoes of more than 500 tonnes were assessed flat at $2,000-2,040 (€1,620-1,652/tonne) CFR (cost and freight) SE (southeast) Asia.

For iso-tank MMA cargoes of 20-300 tonnes, prices were also unchanged over the same period at $2,000-2,050/tonne CFR SE Asia, according to ICIS.

Until last week, MMA prices had been on a downtrend, shedding between $230-310/tonne or more than 10% from end-June, ICIS data showed.

Producers could no longer afford to bring down prices to protect their margins, which were significantly squeezed by the recent plunge in MMA prices and rising costs of feedstocks such as naphtha, acetone and methanol, market sources said.

Japanese producers face additional strain from the yen’s appreciation. A strong currency is a bane for exports as it effectively makes the products being shipped out more expensive and therefore, less competitive in the market.

Major Japanese producers said they will try to increase their prices for September because of rising feedstock costs. But most market players believe that the current MMA prices at $2,000-2,050/tonne CFR SE Asia may be rolled over for September cargoes.

“We will monitor the market for the time being and may settle for a rollover,” said a major Japanese producer.

MMA’s overall consumption in Asia was lower in August compared with July because of shorter working hours in some countries, particularly in the southeastern region, that observe the Muslim fasting month of Ramadan, which started on 20 July.

In India, demand for MMA typically slows down during the monsoon season.

Meanwhile, Asia’s demand for MMA derivatives such as polymethyl methacrylate (PMMA), transparent acrylonitrile-butadiene-styrene (ABS), cast sheets and emulsions continued to be in doldrums given a general slowing down of global economies amid the eurozone crisis.

Even though end-users now enjoy better margins given a cost advantage from the recent falls in MMA prices, overall demand is unlikely to pick up significantly, market sources said. Consequently, no major fluctuations are expected on MMA prices.

Meanwhile, there were concerns about a possible influx of deep-sea MMA cargoes that could bloat Asia’s supply and exert downward pressures on prices, market players said.

Shipping and selling enquiries of bulk deep-sea cargoes totalling more than 6,500 tonnes from Europe, Russia and Brazil have been heard in the market since early July. Another shipping enquiry for 2,000 tonnes of MMA from Brazil to Korea surfaced on 13 August, market sources said.

But no confirmed Asian buyers of the cargoes have emerged so far. Most end-users have very little requirement for bulk cargoes, given the current weak downstream conditions.

The sellers, however, may continue seeking export opportunities to Asia because of the summer holiday season and weak downstream demand in Europe, market players said.

($1 = €0.81)

Read John Richardson and Malini Hariharan’s blog – Asian Chemical Connections
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By: Junie Lin

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