Europe Q3 MMA contracts rise €30-40/tonne on tighter supply

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

LONDON (ICIS)--European third-quarter methyl methacrylate (MMA) contract prices have increased by €30-40/tonne ($40-53/tonne) from the second quarter because of tighter supply and steady demand, sources said on Friday.

Availability is limited, owing to the sales control in place at Lucite International. The UK-based MMA producer encountered technical problems at its Cassel site in June. The producer is expected to be back on stream this month, with sales control to remain in place until 31 July.

“We're making the transition back to normal business,” a source from the company said.

Market sources said buyers have been on a 50-60% allocation rate.

Demand from the coatings sector is healthy. The peak season started later than usual owing to cold spring temperatures and macroeconomic uncertainty, but an improvement in the weather helped strengthen demand for the sector, although levels are lower than seen in 2012.

July demand has been stable and a producer said there has been no real sign of a decline in buying interest.

However, a buyer said: “Demand is not strong and supply is improving rapidly.” It said prices should be going down or at most rolling over in the third quarter. “There is no real demand.”

It said that since March, feedstock costs have been going down. It also said it would be very difficult to pass on increases to its customers, given the state of the economy and following steep increases on MMA in the second quarter.

August demand will weaken slightly as is usual because of summer holiday absences and as manufacturers shut down plants for maintenance. However, some players said consumption levels are better than expected.

One buyer said: “The trend for Q3 is up. Producers’ margins have been eroded. It's a chance for them to get something back. I expect it to be tightish throughout August.”

Spot prices came down this week on marginally improved availability, traders and buyers said, after reaching their ceiling last week when prices had risen by over €100/tonne since the settlement of second-quarter contracts.

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($1 = €0.75)

By: Helena Strathearn
+44 208 652 3214

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