Asia PMMA prices continue drop, might pick up in Q4

SINGAPORE (ICIS)–Asia’s polymethyl methacrylate (PMMA) spot prices continued to fall this week as concerns over China’s economic turmoil weighed on sentiment amid pressure from downbeat import demand.

However, there was some optimism  that spot prices could gather ground going into the fourth quarter, where PMMA seasonal demand typically picks up, market sources said.

Spot prices of general-purpose grade PMMA stood at a mid-point average of $2,190/tonne CFR (cost and freight) in the week ended 3 September, falling from $2,225/tonne CFR Southeast Asia a month ago, dragging down prices to levels not seen since February 2010 when prices averaged at $2,140/tonne CFR Southeast Asia.

Within Southeast Asia, sluggish demand for general-purpose grade PMMA has prompted some regional suppliers to scale back on their asking levels for September delivery parcels, partly to stimulate buying appetite.

In China, spot trading activity was thin owing to the public holiday from 3-4 September. Still, a persistent supply glut at a time when buying appetite is poor depressed market sentiment.

This was further exacerbated by uncertainty in China’s state of economic health following the devaluation of the Chinese Yuan, market sources said earlier this week.

Moreover, the declines in spot prices of GP-grade PMMA partly stemming from the Chinese Yuan devaluation were evident across other engineering plastics such as polycarbonate, market sources observed.

China’s imports of PMMA rose by 10% in July compared with the previous month, latest customs data showed.

The swell in PMMA import volumes for the month coincides with current demand that is dismal in the region while buyers, particularly those saddled with inventories, shied away from import commitments, market sources said.

With China’s economic situation uncertain, as is volatility in upstream crude oil futures, it is difficult to say where the market is heading in terms of spot prices, a Southeast Asia-based supplier said.

Meanwhile, China’s manufacturing purchasing managers’ index (PMI) fell to 49.7% in August from 50.0 levels in July, according to official data. The latest PMI reading was the lowest in three years, signaling a contraction in manufacturing growth activity.

Upstream feedstock methyl methacrylate (MMA) markets in Southeast Asia are also facing downbeat demand on an import basis, which has exerted downward pressure on spot prices.

On a CFR Southeast Asia basis, spot prices of MMA in cargoes of 20-300 tonnes were at a mid-point average of $1,670/tonne as of 28 August, ICIS data showed.

This marked a 3% decline from a month ago and also at 2009-lows when prices averaged at the same level.

MMA is used as a feedstock in the production of PMMA, a transparent and high-resistance type of engineering plastic.

Read John Richardson and Malini Hariharan’s blog – Asian Chemical Connections

Focus article by Melanie Wee