Europe Q1 PMMA contract prices soften on lacklustre demand

01 February 2013 23:59  [Source: ICIS news]

LONDON (ICIS)--European polymethyl methacrylate (PMMA) first-quarter contracts fell by €0.10-0.20/kg from the previous quarter on poor demand in a well-supplied market, sources said on Friday.

Contracts for standard grade material into the extruded sheet sector settled at €2.00-2.30/kg ($2.70-3.11/kg) FD (free delivered) NWE (northwest Europe).

There were also rollovers on contracts, depending on the starting point, and market prices range from €1.90-2.30/kg FD, with the majority settling in the published range.

A buyer said: “Prices are down by €0.15-0.20/kg because of overcapacity. The producers are having difficulty justifying rollovers.”

Producers said contracts had rolled over or decreased slightly. “We have seen rollovers or reductions by €0.05/kg, depending on the starting point,” one supplier said.

Prices have weakened on soft demand. However, demand has improved compared with that seen in the fourth quarter and another producer said it was now seeing enquiries from those they would consider spot purchasers.

One consumer said: “The bottom line is that PMMA is on the floor regarding sheet prices. Demand is extremely poor, margins are being squeezed, and there are even sillier prices out there. Nobody's winning at all. It’s a difficult situation, I thought we would have seen a bit of lift by now, but it remains to be seen. There is too much supply and the end users are not allowing increases.”

Producers remain concerned about the impact of feedstock costs on production margins last year, and had aimed to achieve a rollover this quarter to recover costs.

Another buyer said indications from the automotive industry are that demand for PMMA will stay slightly below 2012’s level. “It is particularly weak from French and Italian car makers,” the buyer said. “Performance across the industry is not at its optimum for the time of year. Somebody would have to take capacity out or demand would have to increase in order for PMMA prices to rise now.”

Buying interest is lower because of uncertainty that has arisen from the ongoing eurozone debt crisis. Attractively-priced imported material is adding further downward pressure on prices. “Imports could pose a problem [for European prices] if demand in Asia doesn't improve,” a producer said.

It added: “Demand is looking a bit better through the first quarter, but visibility beyond that is very poor.”

The first producer said with restocking taking place, demand is not bad for January, “but it is not fantastic,” it said. “It’s also not the best month to see how demand is. It seems it is just below the level it was last year at the same time. February looks a bit weaker than January although the month is 28 days so perhaps it is because it’s shorter.”

Upstream, first-quarter methyl methacrylate (MMA) contracts are largely settling with small decreases, because of good availability and lacklustre demand.

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 = €0.74)

By: Helena Strathearn
+44 208 652 3214

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