Price and market trends: Asia PMMA seen to be weak in February

22 February 2013 10:26  [Source: ICB]

Ample supplies and weak downstream demand bode poorly for polymethyl methacrylate prices

Asia's general purpose (GP) polymethyl methacylate (PMMA) market is likely to remain lacklustre in February because of weak demand amid closure of the key China market for the Lunar New Year holiday, industry sources said on 14 February.

Traders and regional producers expect limited upside for GP PMMA prices in the near term, despite high feedstock methyl methacrylate (MMA) costs.

The Chinese markets were closed on 9-15 February. The Lunar New Year is widely celebrated in other countries in northeast and southeast Asia for two days bringing business activity to almost a standstill.

There is wide expectation that buying momentum will pick up in the second half of February, when Chinese market players come back after their week-long holiday but industry sources said this may not be enough to lend support to GP PMMA prices.

"Supply is ample, and downstream demand remains lacklustre on the back of the poor macroeconomic conditions," a regional producer said.

South Korea's Daesan MMA (DMMA) has introduced a new 60,000 tonne/year polymethyl methacrylate (PMMA) plant that had added to the existing oversupply woes.

GP PMMA prices had largely stagnated for four months straight since mid-October 2012 at current levels despite a $110/tonne (€81/tonne), or more than 5%, increase in upstream methyl methacrylate (MMA) costs during this period.

In the week ended 14 February, GP PMMA prices on a CFR (cost plus freight) southeast Asian were at $2,550-2,600/tonne while prices were $2,200-2,300/tonne CFR China, largely unchanged from previous months.

Benchmark MMA prices for cargoes more than 500 tonnes were hovering at $2,130-2,150/tonne CFR SE Asia in the week ended 8 February.

Asian PMMA producers might have to wait until March before the market gains pace as the downstream end-users usually ramp up production by late March or early April.

PMMA is a transparent thermoplastic, often used as a lighter, shatter-resistant alternative to glass. GP PMMA is used in household products such as cosmetics bottles, and its automotive applications include car tail lights and speedometer covers.

Major PMMA suppliers previously attempted to hike PMMA offers in late January, but there was not much buying interest at the time.

Hence most producers - facing squeezed margins from high upstream costs and poor demand - opted to run plants at low rates.

A healthy spread between MMA and PMMA prices is about $300/tonne, according to the industry sources.

For March, several major producers said they are considering hiking prices by $50-100/tonne to protect margins but the outcome remains to be seen.

By: Junie Lin

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