Europe July MMA contract prices settle up in tight market

19 July 2013 23:59  [Source: ICIS news]

LONDON (ICIS)--Europe July methyl methacrylate (MMA) contract prices have risen by €60-70/tonne ($79-92/tonne) from June, on the back of tighter availability and steady-to-firm demand, sources said on Friday.

July MMA contract prices are at €1,810-1,840/tonne FD (free delivered) NWE (northwest Europe), and are €60/tonne above levels seen in the same month in 2012.

Availability is limited, owing to the sales control in place at major producer Lucite International. The 200,000 tonne/year MMA supplier encountered technical problems at its Cassel site in the UK in June.

The producer is expected to be back onstream this month, with sales control to remain in place until 31 July. Market sources said buyers have been on a 50-60% allocation rate.

“We have had a lot of unexpected demand,” a seller said. “Everything is very tight, and we have to preserve our balance.”

Demand from the coatings sector is good. Consumption levels typically peak during spring and summer. The season started later than usual this year, owing to cold spring temperatures and macroeconomic uncertainty.

An improvement in the weather has helped to strengthen demand from the coatings sector, which has picked up – albeit at lower levels than seen in 2012.

July production margins have improved slightly, sources said.

Some third quarter contract negotiations are proving tough on varying pricing targets.

“Demand is not strong and supply is improving rapidly,” a buyer said. “Prices should go down, but because of the Lucite situation, we are looking for a rollover. There is no real demand. Feedstock prices have been going down since March, although propylene might increase now.”

The July feedstock acetone MMA contract rolled over, in line with the upstream propylene contract price for July.

Early indications point to potential hikes of €50-100/tonne for the August propylene contract price.

The buyer added: “It would be very unfair if prices increase in August and September. Our customers are asking how they can take increases, and our sales people are having a very tough time.”

August demand is usually subdued, with the majority of the south of Europe closed for summer holidays. Activity in the construction sector slows across Europe.

Another consumer said: “We've secured all the volumes needed for July. Yes, we've paid a hefty premium to achieve that, but we're expecting a period of balancing in August.”

“When Lucite is back, there will be no room for a price pick-up. Demand is not fantastic, it’s flat. Demand in the south of Europe is not there, so it can hardly come down further,” a third consumer said.

Spot prices are €110-120/tonne higher than they were at the time of the June contract settlement. There is little trading activity in the market as spot volumes are thin. Prices are at €1,750-1,800/tonne FD NWE.

Players explained that traders could be achieving higher prices if there was sufficient product to sell. “The traders are crying,” one source said.

Follow Helena Strathearn on Twitter

($1 = €0.76)

By: Helena Strathearn
+44 208 652 3214

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