Europe MMA July prices increase as oversupply eases, feedstocks firm

Author: Katherine Sale

2020/07/31

LONDON (ICIS)--European methyl methacrylate (MMA) July contracts increased €30/tonne, rebounding after 27 months of consecutive price declines.

Third-quarter contract talks are coming to an end, also firming on the back of higher feedstocks, an easing in market oversupply, and an uptick in demand.

Spot prices were stable after recent increases, with less material available outside of contract, and some traders struggling to get volumes.

Demand is steadily increasing across all sectors, with August consumption higher than in 2019.

July contracts settled at an increase, with a range of settlements from a rollover up to a steeper double-digit increase.

Any rollovers or low increases were linked to other monthly settlements, for example not receiving reductions in June, or agreeing to higher hikes in August.

Upward pressure continues for August, with some increases already agreed; dual settlements are not unusual at this time of year, linked to holidays.

The ICIS Q3 settlement will be published next week, with some business still outstanding this week. A range of double-digit increases have been agreed so far.

There has been a clear shift in market fundamentals, with the market much more finely balanced than in recent years. Contract players are largely covered, unless they have higher exposure to the spot market.

Buyers have been asked to forecast volumes for the next three months in some cases, with clear timings on when they will require trucks.

Some buyers were unable to obtain additional truck loads from contract partners, and so looked to the spot market.

Material is tighter on the spot side for any players without strategic stock positions, with some traders unable to obtain product from imports or local suppliers.

European producers are focused on building inventory for the upcoming maintenance stops. Given the higher acetone prices there is little incentive for them to ramp up production to provide volumes for other sellers in the region.

Demand is steadily increasing, but levels from the coatings sector remain lower in areas, particularly automotive coatings.

Higher acetone prices are also a key driver in the current pricing discussions.

Spot prices were stable this week, with deals confirmed on both ends of the range. Prices were assessed at €1,320-1,420/tonne free delivered (FD) northwest Europe (NWE).

Imports are lower in general, with some limited volumes heard from China and South Korea.

There are some delays in vessels, which has reduced expected volume on the spot market. There have also been producer swap agreements to cover this.

Focus article by Katherine Sale