EPCA ’19: Europe MMA buyers to focus on spot as imports, competition increase

Author: Katherine Sale

2019/10/09

BERLIN (ICIS)--European methyl methacrylate (MMA) consumers will lower contractual minimums in 2020 and increase their exposure to an increasingly competitive spot market.

The spot market is set to become more competitive due to higher imports coming into Europe, linked to free trade agreements (FTAs) between the EU and other countries.

Sources have also said that spot is set to become more competitive due to an increase in chemical storage in Europe, as well as the presence of new sellers in the market.

MMA imports into the EU have increased throughout the year, with lower-priced material from Asia weighing on European spot prices.

There are expectations for an increase in MMA coming from Japan, after the country's FTA with the EU came into force on 1 February.

According to sources, Mitsui has invested in chemical storage in its European operations, with estimates between 800-1,500 tonnes.

Mitsui had not responded to a request for comment at the time of writing.

The sources were speaking on the sidelines of the European Petrochemical Association (EPCA) annual meeting.

An increase in Saudi Arabian MMA is also expected, as the country's petrochemicals major SABIC aims to increase its market share in Europe, sources said.

SABIC is a partner at Saudi Methacrylate Company (SAMAC), a 50:50 joint venture with Mitsubishi Chemical (MCC), with a production capacity of 250,000 tonnes/year.

The company is expected to have an increased allocation from the joint venture next year.

SABIC had not responded to a request for comment at the time of writing.

European MMA buyers were heavily contracted in 2018 and 2019 because they were over-cautious after the supply constraints in 2016 and 2017.

Supply started to lengthen in mid-2018. At this stage, market players have no concerns over supply for next year.

There have been very attractive offers on the spot market in 2019, with Asian sellers looking for a home for product, often well below contract prices in Europe.

However, with demand weak throughout the year the majority of buyers have had little opportunity to take advantage of the lower spot offers, tided to high contractual minimums.

At times, buyers have struggled to take the minimum volumes contracted in 2019, and the pessimism over demand is set to spill into 2020.

Since the supply shortage, buyers have increased their suppliers, getting approvals passed for new sources.

This increased spread between suppliers will only increase in 2020, as sellers look to compete for market share.

This competition between sellers is not exclusive to producers, with traders looking to increase their positions in the market.

Some buyers are moving back to the more traditional 80/20 spread between contract and spot, in order to lower their average price of material.

The EPCA annual conference runs in Berlin on 6-9 October.

Pictured: SAMAC's MMA production facilities in Saudi Arabia
Source: MItsubishi Chemical 

Focus article by Katherine Sale