EPCA ’17: Global MMA supply constraints may put Europe at its tightest year to date

BERLIN (ICIS)–The crippling supply constraints that have plagued the global methyl methacrylate (MMA) market continue, with little relief on the horizon, which is set to be the key topic for players at 51st annual European Petrochemical Association (EPCA) meeting.

It has been a turbulent year for MMA players, with a steady stream of production problems in every region.

With fresh problems emerging last week and no new capacity yet on stream, some players fear that October may be the tightest month year-to-date in Europe.

Last week, Lucite International declared force majeure at its Cassel facility in the UK, on the back of a technical issue at the plant.

European supply was already tight and restricted because of the planned maintenance at Evonik’s Worms, Germany, plant in September.

The impact on sentiment from the force majeure was immediate, and the panic that has swept the market at many points this year present once again, according to industry players.

Spot prices soared this week in the aftermath of the force majeure, with the ICIS range increasing by €200/tonne on 29 September.

The range in spot prices discussed in the market was immense, with some traders offering product with over a €600/tonne spread.

Global players have been eagerly awaiting fresh capacity in the Middle East, but the wait from this volume continues.

While product was initially expected to be manufactured in July, the Saudi Methacrylate (SAMAC) facility is still in the commissioning phase.

SAMAC is a joint venture between MMA major Mitsubishi Rayon and newcomer to the market SABIC.

The facility has a production capacity of 250,000 tonnes/year, and also a downstream polymethyl methacrylate (PMMA) unit.

However, with the facility still in the commissioning phase, players are now only expecting to see volumes at earliest later in the fourth quarter.

Europe is not the only restricted region, with constraints in the US continuing after Hurricane Harvey.

The supply issues in the US impacted European September contract prices, which settled at a double-digit increase.

After a year of significant monthly increases, buyers were hoping for stable-to-soft prices in September, but intensified supply issue soon curtailed this.

Contact prices for October are already being discussed, and in the wake of new issues in the market triple-digit increase targets from sellers have started to emerge.

Buyers are asking how much further prices can continue to climb, and if there is a ceiling to be reached.

Substitutions for downstream players have already taken place, with buyers looking for alternative products for security in supply and to avoid sharp increases.

Some downstream PMMA buyers have turned to polycarbonate (PC) and styrene acrylonitrile (SAN), as an alternative.

However, not all buyers have this flexibility, especially those in the automotive sector.

Throughout the shortage there has been talk that large car manufactures have put pressure on PMMA buyers, to order additional volumes to try and provide security of supply.

With players pursuing every avenue for product, this has magnified demand in the market and added to the back log in orders.

Actual demand is also healthy, which at times has been frustrating for players, who have been unable to fulfil requests.

The key questions for players this weekend will be, how long will the new wave of problems continue and when will the new plant in the Middle East be ready.

Players are also looking to the future, and trying to learn from this difficult and financially damaging year.

Some buyers are looking to increase the number of suppliers, in order to protect themselves at times of unplanned outages.

Suppliers inside of the region but also overseas are also an option, with suppliers in numerous geographical locations also one way to hedge against constraints, according to industry professionals.  

After a year of unprecedented price increases, global supply problems, and buyers at times stopping production, the discussions taking place at EPCA as well those to the year-end promise to be interesting.

The annual EPCA meeting runs from 30 September to 3 October in Berlin.

Focus article by Katherine Sale

Pictured above: An aquarium at a Berlin hotel, made with PMMA panels
Source: Jochen Tack/imageBROKER/REX/Shutterstock