Europe MMA contracts falling for 11th consecutive month on ample supply, low demand

Source: ICIS News

2019/02/18

LONDON (ICIS)--While European methyl methacrylate (MMA) February contract negotiations are still ongoing for many players, agreements have so far posted double- and triple-digit decreases, marking the 11th consecutive drop in the monthly contract.

Contract talks are expected to come to an end this week, with looser supply and demand fundamentals remaining the main source of downward pressure in the market.

Spot prices remain stable this week, as buyers continue to try and pressure prices under the €2,000/tonne FD (free delivered) NWE (northwest Europe) mark, while traders stand firm above that point.

Supply remains plentiful, but it is expected to re-balance going forward with plants at reduced rates and maintenance ramping up into spring.

Demand is picking up and will firm further into March, as the traditional coatings season starts.

Global operating rates will remain lower going forward, with plants not required to run hard given the weaker demand in Asia and Europe.

There's a number of maintenance stops currently taking place in Asia, with Evonik and Lucite carrying out stoppages in Europe in April.

WEAK AUTO
There remains a poor outlook from the plastics sector, with automotive demand from both Europe and Asia expected to be weak for the first half of the year.

The automotive market is a key end market for polymethyl methacrylate (PMMA), and also the main sector of growth going forward.

Producers have said they are aiming to bring in new applications regarding PMMA's scratch-resistance and durability, which would increase its use in vehicles.

Some traders said this week there have been higher demand, with some suggesting it may be linked to stock piling ahead of Brexit.

Higher demand could also be due to other factors like the season, the end of destocking in the market, and buyers being incentivised to purchase after recent pricing decreases.

In related market news, INEOS Nitriles declared force majeure at its Seal Sands acrylonitrile (ACN) plant in the UK, a source at the European chemicals major said on 14 February, although there has been no immediate impact on Lucite International's MMA production.

First-quarter MMA prices concluded at €2,260-2,290/tonne FD (free delivered) NWE (northwest Europe), a €150/tonne decrease on the low end and a €200/tonne decrease on the high end from the fourth quarter.

The January MMA contract settled at €2,495-2,515/tonne FD NWE, a €100/tonne decrease on the lower end and a €125/tonne decrease to the high end.

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Nearly all MMA is polymerised to make homopolymers and copolymers, the largest application being the casting, moulding or extrusion of PMMA or modified polymers.

Pictured: MMA's downstream product PMMA being used in the automobile industry
Source: Sumitomo Chemical Asia 

Focus article by Katherine Sale