Europe MMA spot prices hit four-year low as buyers try to fulfil contract minimums

LONDON (ICIS)–European methyl methacrylate (MMA) spot prices have fallen to a four-year low with demand for additional volumes limited as buyers look to fulfil contract minimums.

Demand is expected to suffer as Europe intensifies lockdowns to contain the spread of coronavirus, and sharply lower feedstock prices are weighing on market sentiment.

Drops in the April feedstock contracts have not been reflected in the cost of production at this stage but are already adding to the general morose in the market.

April and second-quarter contracts negotiations are ongoing, with double-digit decreases discussed for both.

Some discussions stalled this week, following the drop in feedstocks, with a decrease of more than 21%, or €175/tonne, in the propylene April contract price.

Some buyers are pursuing revised offers from sellers based on this.

Demand is mixed, dependent on the application, with supply adequate.

Before the sharp falls in feedstocks, sources had said prices were close to “bottoming out” after two years of reductions, but the latest sharp drops  alter this.

While up to this point supply and demand dynamics had dictated pricing, the cost of production is set to become now more of a driver.

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Demand is mixed, with automotive production in the region stopping, and construction softer.

This will only worsen in the coming weeks, especially if facilities close downstream because of lack of operating personnel.

Supply is balanced, with logistics the greater issues for availability. Lead times are extended, and again this is only expected to worsen as truck driver shortages increase.

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Demand is softer across the majority of end-user applications, with buyers trying to meet contract minimums that are based on forecasts made before the coronavirus pandemic hit Europe.

There is higher spot demand from the polymethyl methacrylate (PMMA) sector, with a surge of demand for transparent sheets.

PMMA sheets are used as barriers in supermarkets and pharmacies to protect workers from the spread of the virus.

Other transparent polymers are also being used, including polycarbonate (PC), polystyrene (PS), polyethylene terephthalate-glycol (PET-G).

This is short-term demand, however, with spot activity largely expected to diminish as the crisis dents manufacturing activity.

Demand will fall further as end-user factories close, with this slowdown to trickle up the value chain back to the MMA producers.

Exceptionally low offers from Chinese traders to European players have been quoted by sources, with some gauging the feasibility of moving product at this time.

Logistics are extremely challenging, with no guarantee of demand once traders have overcome the considerable task of actually getting the product into Europe.

Front page picture: Panels at a supermarket check-out in Latvia aimed at protecting workers from coronavirus infection; PMMA demand for that end market has increased as Europe fights the pandemic 
Picture source: Valda Kalnina/EPA-EFE/Shutterstock

Focus article by Katherine Sale