Europe MMA Q1, January contracts fall at start of ‘seminal’ year

Author: Katherine Sale

2020/01/13

LONDON (ICIS)--European methyl methacrylate (MMA) first-quarter and January contract talks are ongoing, with double-digit decreases discussed for both, at the start of what has been described as a “seminal” year for the market.

Downward pressure continues, although there is sentiment that the bottom of the pricing cycle may be in sight, with pricing movements slowing.

Spot prices fell this week, with buyers largely covered under contract, making the spot arena particularly competitive, as traders fight for sales.

“People are still fishing and hunting for volumes,” said a trader.

Supply remains long, despite lower operating rates in the region, with demand in line with expectations for the first working week of the year.

Q1/January contract talks will continue for the coming weeks, with the majority of talks only starting this week.

December MMA contracts settled at €1,900-2,000/tonne FD (free delivered) NWE (northwest Europe), a €50/tonne decrease on the lower end and a €35/tonne decrease on the high end from November.

MMA Q4 contracts were valued at €1,875-1,890/tonne FD (free delivered) NWE (northwest Europe), a decrease of €120/tonne from Q3.

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Annual contract terms have been renegotiated, with some higher decreases linked to changes in formulas.

ICIS assesses freely negotiated quarterly and monthly contracts.

Buyers are well covered at this stage under contract, with many not taking volumes on the spot market, as they are cautious over meeting contracted minimums.

NEARLY TWO YEARS OF FALLS
Prices have fallen for 21 consecutive months, with sentiment that at least for the quarterly contract this may be the last downward pricing correction.

However, that is largely dependent on supply and demand fundamentals, which remain challenging.

“It will be a seminal year for methacrylates,” said one seller.

Spot prices edged lower this week, with a very wide range discussed in the market.

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Prices in the lower €1,400s were also heard; however, this was largely buyers trying to gauge how low they could push sellers.

Given the further reduction in spot prices, Europe is becoming less attractive for exporters, with a reduction in Asian volumes expected.

There remains talk of delays for one Middle Eastern producer, linked to production issues at the facility since October.

Focus article by Katherine Sale