OUTLOOK ‘13: Asia MMA seen rangebound on supply-demand balance

21 December 2012 04:01  [Source: ICIS news]

By Christina Siantar

SINGAPORE (ICIS)--Spot methyl methacrylate (MMA) prices in Asia are expected to be largely stable throughout 2013 on the back of a relatively balanced supply and demand situation, market players said.

Demand is likely to pick up in early February 2013, after the Chinese New Year holidays, while supply in March and April is likely to tighten amid a heavy turnaround at regional MMA facilities, industry sources said.

But these factors may not be enough to trigger a strong upswing in MMA prices, they said.

In 2012, the lowest average price of bulk cargoes of more than 500 tonnes were at $2,010/tonne (€1,528/tonne) CFR (cost & freight) SE (southeast) Asia in September, while the highest recorded average was from end-May to mid-June at $2,255/tonne CFR SE Asia, according to ICIS data

From June to September 2012, prices plunged by about 11% because of sluggish demand amid poor global economic conditions, but recovered slightly in the fourth quarter because of supply constraints.

Heavy turnaround season and unplanned mechanical issues characterised the last three months of 2012, but demand remained lacklustre, industry sources said.

“Demand growth [in 2013] will be driven mainly by the key Chinese market, with some expected increment in demand from southeast Asian [countries] such as Malaysia and Indonesia,” said a major Japanese MMA maker.

“Supply might shrink because of reduced availability of raw material,” he added.

Major MMA makers – Japan’s Mitsubishi Rayon Co (MRC) and Taiwan’s Kaohsiung Monomer Co (KMC) – have scheduled turnarounds in March and April next year.

“Supply of MMA may be tighter in 2013. Feedstock hydrogen cyanide (HCN) supply from the acrylonitrile (ACN) plant, as well as operating ratio of regional naphtha crackers is forecasted to be lower in 2013,” another MMA producer said.

Demand is projected to grow by 100,000 tonne to 1.86m tonnes in 2013, according to MRC, which is the world’s largest MMA producer.

“Downstream demand is unlikely to recover in the first half of 2013. There might be a slight chance of recovery in the second half but then again, I am not optimistic,” a regional MMA seller said.

MMA buyers are also bearish as supply of key downstream product, polymethyl methacrylate (PMMA), is expected to be long in 2013.

PMMA producers may resort to cutting production in response to falling prices, thereby reducing the overall demand for MMA in 2013.

“I expect demand to be weak and in the first quarter, I don’t think demand will recover. Perhaps if Europe recovers, then maybe, demand may pick up,” said a seller of optical-grade PMMA.

Optical-grade PMMA is mainly used in the production of television, laptop, tablets and mobile phones.

In the general-purpose (GP) grade PMMA sector, most industry players’ outlook for 2013 is negative because of an oversupplied market, increasing competition from other substitutable plastics such as polycarbonate (PC), as well as low domestic PMMA prices in the major China market.

GP-grade PMMA can be used to produce extrusion sheets and household products, as well as applications in the automotive industries. Some products include bathroom accessories, kitchen wares, ornaments, sign boards, speedometer covers.

MMA is used in the production of PMMA, artificial marble, cast sheets and acrylic resins for coatings and emulsions.

($1 = €0.76)

By: Christina Siantar
+65 6780 4327

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