Asia PMMA on 1-yr losing streak amid trade war; eyes on G20 summit

SINGAPORE (ICIS)–Asia’s polymethyl methacrylate (PMMA) import markets have been on a losing streak over the past twelve months, as the long-drawn US-China trade battle continues to rain blows on consumer sentiment.

A ship docking at Nansha port in, Guangzhou, China. (Source: Xinhua/Shutterstock)

The dull mood revolving China’s economy will continue to cast a shadow on the Asian markets, unless a major breakthrough occurs and fires up demand.

“Something positive could possibly emerge during the G20 summit in late June at the very earliest, if any. That is the next best bet,” an Asian producer said.

The upcoming G20 summit will be held in Osaka, Japan, on 28-29 June 2019.

“It all depends on [the leaders of] US and China, we’ll have to see. Until then, there is no strong sign for the market,” the producer said.

PMMA import values in southeast Asia and China have tumbled by over $700/tonne, or 24-34% from multi-year highs hit in June 2018.

For the week ended 6 June 2019, regional PMMA prices were assessed at $2,400/tonne CFR (cost & freight) SE (southeast) Asia and at $2,100/tonne CFR China, according to ICIS data.

The downturn in PMMA prices also mirrors the movement for Asia’s polycarbonate markets (PC) – in which spot prices have slumped to record lows in nearly a decade.

PC can be used as a substitute for PMMA in some applications and is traditionally more expensive.

Substitution Trend – PMMA vs PC China

There are expectations that downstream demand in China would shrink as the US tariffs make it harder for end-products to be exported to the world’s biggest economy, players said, referring to various sectors such as automotive and plastics.

This could, in turn, dampen the situation in the rest of Asia further since more PMMA spot cargoes are likely to be diverted away from China on decreased offtake.

Demand for PMMA in southeast Asia is described as reasonably supported by decent performance in major downstream automotive sector in the region, for now.

By and large, regional buyers are inclined to purchase small volumes only when necessary, taking time to compare offer levels before making their orders.

Asian suppliers, in contrast, face persistent pressure to move cargoes as some production levels have to be sustained from a cost perspective.

Operating rates remain largely capped amid healthy inventories, whereas there appears to be limited impact coming from the recent planned turnarounds.

Although import offers may be weighed down amid supply competition and the Chinese yuan depreciation, feedstock methyl methacrylate (MMA) costs would provide a floor as to how much PMMA prices could fluctuate.

Feedstock Spread – MMA and PMMA SE Asia

In the domestic Chinese PMMA market, consumers engage in talks at more frequent intervals, such as on a weekly basis, and procure limited amounts each time. Buy-side stockpiles tended to be low.

Local producers and traders remain broadly open to revising their offers to attract orders, amid ample supplies.

PMMA is used in the manufacture of automotive, household and electronic products, and is the largest downstream market of MMA.

Focus article by Kheng Wee Loy

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