15 February 2013 04:02 [Source: ICIS news]
By Junie Lin
BRISBANE (ICIS)--Strong gains in Asian methyl methacylate (MMA) prices are likely to be capped despite high feedstock costs because of languid demand and fresh supply of the material, industry sources said on Friday.
Producers are eying a $100/tonne (€75/tonne) increase in prices in March but may face strong buyers resistance, the sources added.
Demand is seasonally low in the first quarter due to festivities of the Lunar New Year period, which fell in February this year.
Most northeast and southeast Asia countries took two days public holiday but the key China market remained closed for the whole week of 9-15 February.
Slow demand and poor visibility regarding March off take is likely to cap any strong gains in the well-supplied market, market players said.
Buyers in the downstream cast sheet and emulsions segment took 20-30% less cargoes from their average off take in February in the light of the holiday season.
MMA consumption for March may only resume to regular quantities at best, sellers said.
MMA is polymerised to make homopolymers and copolymers with the largest application being the casting, moulding or extrusion of PMMA or modified polymers.
Asian MMA prices have risen over the past four months, albeit slowly on soft demand and ample availability.
Benchmark MMA prices for cargoes more than 500 tonnes were hovering at $2,130-2,150/tonne CFR (cost & freight) SE (southeast) Asia in the week ended 8 February, ICIS data showed.
This is equivalent to a $110/tonne, or more than 5%, increase during this period, averaging close to less than $30/tonne increment per month.
However, the key concern for producers remains the margins.
“This is not enough to cover rising costs…especially when we are facing high fixed costs due to low production rates,” a key producer said.
Major producers stressed that they cannot afford to go any lower on margins.
With the prices of key feedstock indicator, naphtha hitting fresh near 10 month-high on 8 February, Asian producers are nervous about the future.
And their attempt to hike March prices might fall short upon fresh supply, market sources added.
Thailand-based PTT Asahi Chemical has started commercial production at its 70,000 tonne/year methyl methacrylate (MMA) plants in Map Ta Phut, Thailand and is currently operating at nearly full rate, its Japanese parent Asahi Kasei said on 14 February.
The impact of extra supply might be softened by the traditional heavy turnaround season in Q2, leading with Japan’s MMA major, Mitsubishi Rayon Co (MRC)’s scheduled shutdown of its 55,000 tonne/year butane-based No 1 MMA line in Otake from March 11 to 19 April, market players said.
MMA is polymerised to make homopolymers and copolymers with the largest application being the casting, moulding or extrusion of polymethyl methacrylate (PMMA) or modified polymers
($1 = €0.75)
Read John Richardson and Malini Hariharan’s blog – Asian Chemical Connections
|ICIS news FREE TRIAL|
|Get access to breaking chemical news as it happens.|
|ICIS Global Petrochemical Index (IPEX)|
Asian Chemical Connections