Europe MMA buyer expects tighter market and higher prices

28 March 2013 11:57  [Source: ICIS news]

LONDON (ICIS)--The methyl methacrylate (MMA) market in Europe will be tighter in April and May and the sector will see price increases, but discussions will be lengthy and tough, a buyer said on Thursday.

The MMA consumer said: “The issue still, of course, is about what is coming in [to Europe] in the way of imports. Imports from Brazil are coming in, but at higher prices. I think April and May will be a little bit tighter.”

There are fewer imports coming into Europe and planned outages are further limiting supply. Evonik Industries is undergoing a maintenance turnaround at its 225,000 tonne/year MMA facility in Worms, Germany, which is expected to be completed within the next few days.

“There will be increases, it just depends on how much each side agrees,” the buyer said. It added that pricing ideas between buyers and sellers are wide apart. “I think they [negotiations] will be lengthy and tough.”

Producers are targeting hikes of €120-145/tonne ($154-186/tonne) for Q2 contracts on tightening supply, improving demand, firming raw material costs, and also in an attempt to restore margins.

The upstream April propylene contract price fell by €50/tonne, and it remains to be seen what impact, if any, this will have on MMA discussions for April.

Buyers talk of the lack of confidence in the sector, exacerbated by the cold weather and ongoing concerns about the troubled eurozone economy.

Demand is below 2012 levels. Increases would be difficult to filter through to their own customers, they said, even if demand improves in April as temperatures rise.

One consumer added that the level that is being targeted would be impossible to pass on downstream, particularly as material is sufficiently available and remains competitively priced.

While there is some agreement on the buy side that supply will tighten, some sources said the market would remain balanced during the second quarter.

The buyer said of the market: “It's balanced to tight. It's [material] out there but you've got to accept you’ll pay more for it.”

At the beginning of March, spot MMA prices reversed a nine-month downward trend, after a near-16% decline between May last year and February, on ample availability, amid global economic uncertainty. Spot prices are at €1,570-1,610/tonne FD (free delivered) NWE (northwest Europe).

First-quarter MMA contracts decreased. March saw the sector’s first monthly contract price rise since September last year, after prices had fallen by €95-120/tonne from September 2012 to February 2013.

($1 = €0.78)

By: Helena Strathearn
+44 208 652 3214

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