Europe MMA spot prices reverse nine-month downward trend

01 March 2013 22:41  [Source: ICIS news]

LONDON (ICIS)--Spot methyl methacrylate (MMA) prices in Europe have moved up for a second week on tightening supply after a 9-month decline, sources said on Friday.

The spot market saw a near-16% decline between May last year and February, on ample availability, amid global economic uncertainty.

Prices reached their 2012 peak in May at around €1,820/tonne ($2,370/tonne) FD (free delivered) NWE (northwest Europe), and began falling from June last year until they bottomed out at an average level of €1,530/tonne by mid-February.

Reduced availability, largely owing to a reduction in imported material, lifted prices by €20-30/tonne last week. Spot prices continued their uptrend this week, rising by an additional €20/tonne.

European consumers usually benefit from imports of Brazilian, Russian and Asian origin. However, there have been limited volumes from Russia in the last six months and no material was shipped from Brazil in February.

Brazilian material is predominantly being exported to Asia and the US, where higher prices are achievable. Price hikes are likely for March delivery of Brazilian material, and strict sales control is being implemented by traders in Europe as they focus on ensuring that they are able to replace inventory at the higher price level. Spot levels might rise further in April. One trader said if it is not able to achieve the prices it needs in March, it will hold on to its stock until prices move up.

The trader said European spot prices would need to move higher to cover the increased cost of material from Brazil.

“We sold at €1,600/tonne FD and at €1,590/tonne FD NWE,” a trader said. “We need it higher. I will definitely sell as little as possible and only to regular customers. I am not offering to the market or being proactive. When the Evonik shutdown happens, for sure there will be higher prices. I don't want empty tanks after having sold at low prices. An increase level of eventually €100/tonne would give the breathing space needed so much,” the trader said.

Demand in March and April is expected to pick up slightly, as is usual during spring, and an outage at Germany's Evonik Industries is expected to tighten the balanced market. Market sources said the 225,000 tonne/year MMA facility in Worms will undergo a regular maintenance turnaround at the end of March and beginning of April.

There are fewer imports coming into Europe because of the euro/dollar exchange rate. Product is instead heading to the US and Asia, where supply is tighter and prices are higher than in Europe. Asian MMA availability was tight in January and February because of production outages there. The euro has weakened in the past few weeks and this has resulted in fewer exports to Europe as the region is less attractive, price-wise.

Market participants in Europe remain nervous, amid macroeconomic uncertainty. Players are avoiding building stocks in advance of the coatings season. Producers expect to see normal coatings demand in April and May. It is likely to be lower than it was in 2012, buyers said, but is expected to improve in the coming weeks.

In Asia, prices are stable-to-firm. Initial offers for March are $100/tonne higher, based on the need for producers to improve margins because of high raw material costs.

($1 = €0.77)

By: Helena Strathearn
+44 208 652 3214

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