MMA market primes itself for increases ahead of coatings season

18 March 2013 15:28  [Source: ICIS news]

LONDON (ICIS)--Methyl methacrylate (MMA) demand in Europe remains slow but players in the sector expect further price increases in the second quarter, largely on the back of higher feedstock costs, sources said on Monday.

“Demand is still weak but I expect some increases in [spot] prices in April due to feedstock increasing,” a trader said.

MMA producer Lucite International is targeting a €145/tonne ($188/tonne) rise over first-quarter contract prices, because of high raw material costs, tightening availability, a pick up in demand and also as it is striving to regain margin following three consecutive quarterly decreases.

Another producer is aiming for a €120/tonne increase in second-quarter contracts, while producers in the derivative polymethyl methacrylate (PMMA) market are aiming for triple-digit hikes next quarter.

Producers had attempted to raise prices in the first quarter, but prices came down on poor demand in a competitive market.

“We looked for price increases in Q1 and weren't supported. What we thought would happen has happened, and that is that product has become less available, demand has come up,” one producer said. “The market is tighter, we are having to be very careful with our stocks, imports are going elsewhere.”

The producer added that hikes were necessary predominantly because of recent raw material increases. Feedstock acetone contract prices have risen by €75/tonne since the beginning of the year.

A third producer said it was confident it would achieve the increases it was aiming for, though added it was less confident about getting any rest from the costs of acetone and methanol. Hikes are being targeted in the upstream methanol market for the second quarter. “The acetone story is really making targeting increases go from desirable to essential to prevent margins being decimated,” one producer said. “The cost of raw material is really what's exacerbated it.”

There are now fewer imports coming into Europe and planned outages are further limiting supply. Evonik Industries will begins its maintenance turnaround at its 225,000 tonne/year MMA facility in Worms, Germany, at the end of March and beginning of April.

“There has definitely been a tightening of balances,” a buyer said. “I believe that not all imported volumes that traditionally come into Europe are coming. We have taken an increase for spot. I've heard some silly numbers for April in the €1,700s/tonne FD (free delivered).”

The spot market saw a near-16% decline between May last year and February, on ample availability, amid global economic uncertainty. Spot prices have so far risen by €60/tonne in the past month to €1,570-1,610/tonne FD NWE (northwest Europe).

“I accept that there will be an increase in Q2,” the buyer added. “And I believe spot will go up in April over March. With the Evonik turnaround, there is less available MMA and some material from Europe is going to the US. Some of the Brazilian material is not coming in, it's going to the US and China.”

Monthly MMA contract prices in Europe rose for the first time since September in March, after having fallen by €95-120/tonne.

Although the general mood in the market remains cautious, there are signs that demand is picking up in preparation for the coatings season. An uptick in consumption is typical in March and April, when the coatings season usually begins.

With expectations of warmer weather during spring in Europe, as well as a few public holidays, players envisage that end-users will undertake home improvement projects and purchases will boost demand.

“Like the weather, MMA is grey and windy with hopes for better weather soon,” a seller said. “It will be interesting to see how things develop in April because the coatings season is due to start. The bad weather doesn’t help to make any sort of clear assessment of where we are. Between the restocking of January and bad weather of March, where is the actual level of demand?”

($1 = €0.77)


By: Helena Strathearn
+44 208 652 3214



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