OUTLOOK ’18: China MMA to come under pressure in 2018 as supply surges

22 December 2017 03:06 Source:ICIS News

SINGAPORE (ICIS)--China’s methyl methacrylate (MMA) market uptrend this year on short supply will likely reverse with prices coming under pressure as domestic production capacity will post a 37.3% year-on-year growth to hit about 1.105m tonnes/year in 2018.

The expected start-up of two 50,000 tonnes/year MMA units in Shandong by the first quarter of 2018 is likely to increase domestic supply by around 8,000 tonnes per month. The two plants are now undergoing trial runs.

China’s MMA unit start-up schedule for 2018
Producer Capacity (tonnes/year) Start-up schedule
Dongming Huayi Yuhuang New Material 50,000 Q1 2018
Yidali Chemical 50,000 Q1 2018
Wanhua Chemical 50,000 Q3 2018
Taizhou Ruibai Chemical 150,000 Q4 2018-Q1 2019
Source: ICIS

Meanwhile, operating rates at domestic MMA units may also increase, supported by expected higher supply of feedstock acetone cyanohydrin (ACH).

Shandong Haili Chemical Industry is scheduled to put into operation a 50,000 tonne/year ACH unit in the coming year.

Domestic MMA supply in China has been tight for most of 2017 as more volumes were exported to cover the supply gap in the European and US markets caused by a slew of force majeures (FMs), resulting in rising product prices in the country.

According to ICIS data, MMA prices in Europe have been higher by an average of 17% than that in China’s since March 2017 and the trend continues to date.

MMA prices in east China hit their highest level so far this year at yuan (CNY) 21,650/tonne ex-tank in late October, representing a rise of around 40% from early January and around 55.4% from 2016, according to ICIS data.

Chinese traders, on the other hand, were keen to ship their cargoes overseas in view of lucrative export margins.

By the end of October, the country’s export volumes surged 123% from the same period last year to 57,644 tonnes, while net imports shed 56% year on year to 48,829 tonnes, according to China Customs.

However, with some units in the US and Europe back into operation and new capacities in the Middle East, the long-lasted supply crunch globally is likely to ease next year.

One addition is the recent start-up of Saudi Methacrylates (SAMAC)’s 250,000 tonne/year MMA plant, expected to bring on 10,000 tonnes to China per month by the first quarter of 2018. It is a joint venture between Mitsubishi Rayon and SABIC.

Saudi Arabia’s Rabigh Refining and Petrochemical Company (Petro Rabigh), a joint venture of Saudi Aramco and Japan’s Sumitomo Chemical, is planning to bring on stream a 90,000 tonne/year MMA unit by the first quarter of 2018.

However, the ample supply that looks set to put pressure on prices in 2018, may be slightly offset by additional demand for the material that will arise from the start of two downstream polymethyl methacrylate (PMMA) units in China.

The units are expected to begin operation in the second and third quarter of 2018.

China’s PMMA unit start-up schedule for 2018
Producer Capacity (tonnes/year) Start-up schedule
Wanhua Chemical 70,000 Q2 2018
Suzhou Double Elephant Optical Materials 80,000 Q3 2018
Source: ICIS

Moreover, downstream users are set to be increasingly reliant on domestically-produced MMA from next year onwards, as imports of recycled MMA will be banned.

China announced an import ban on waste plastics in July, with the measure scheduled to take effect on 1 January 2018.

Before the ban, the country imported around 70,000 tonnes of recycled MMA each year.

According to the source, it is expected to result in an increase in MMA demand by 20%-30% to approximately 14,000 tonnes in 2018, due to expensive MMA price. The rest of the gap will be fulfilled by domestic recycled MMA.

MMA is used in the manufacture of polymethyl methacrylate acrylic plastics (PMMA), acrylic sheet, surface coatings, emulsion polymers and adhesives (ACR, MBS).

Outlook article by Yoyo Liu and Yiting Tang

By Yoyo Liu