China domestic MMA prices to stay firm on tight supply

18 April 2018 06:17 Source:ICIS News

SINGAPORE (ICIS)--China’s domestic methyl methacrylate (MMA) prices are trading at their record highs and may remain supported by tight supply in both the local and import markets amid plant turnarounds.

At the close of trade on 17 April, prices in east China averaged yuan (CNY) 24,250/tonne ($3,861/tonne), up 12% from the previous highest point set in November 2017, according to ICIS data.

MMA inventory in China has remained low in April following unstable operation at new plants, planned and unplanned shutdowns, and some restocking activities in the previous month.

Spot supply was scarce as major producers were focusing on serving their contract customers at the onset of the maintenance season for MMA plants.

The scheduled turnarounds in April will result in a further decline in the average run rate of domestic plants from March’s 67%, which represented a sharp fall from 80% in February.

Jiangsu Sailboat’s 85,000 tonne/year MMA plant and Lucite International’s 180,000 tonne/year plant in China were taken off line from 19 March and 20 March, respectively, and both restarted on 1 April.

Most downstream producers have been raising their prices to pass on the high cost of feedstock MMA to end-users, and were either using up existing feedstock inventories or buying on a hand-to-month basis to cover immediate requirements.

Producers of polymethyl methacrylate (PMMA), the largest downstream sector of MMA, are resisting further spikes in feedstock prices that squeeze their margins, since they could not easily pass on the cost to their customers.

But demand for MMA is expected to strengthen as domestic PMMA producer Suzhou Double Elephant expanding its plant capacity by 20,000 tonnes/year late this month.

A downstream adhesives plant operated by Rike Chemical in Shandong province is also expected to resume production toward the end of April. The plant was shut on 19 December 2017 due to a fatal fire incident.

Meanwhile, downstream sheet producers were looking at replacing virgin MMA with recycled materials in view of the tight supply and high prices. One of them has started switching to recycled MMA.

PMMA and sheet producers account for around 65% of China’s total MMA consumption.

On the import front, China received about 1,500 tonnes of MMA from the Middle East in late March but these will not ease the spot market tightness, as most of the cargoes are under term contracts  Further shipments are not expected to arrive until mid-May.

Meanwhile, some sellers in Asia are looking at diverting cargoes away from Europe to the Chinese market, where prices are higher, but available supply is expected to tighten due to scheduled plant turnarounds in the region in the second quarter.

Regional prices have been tracking the strong gains in China's domestic MMA market.

Additional reporting by Kheng Wee Loy

($1 = CNY6.28)

Focus article by Yiting Tang

Picture: Puzzle piece made of Plexiglass. Methyl methacrylate (MMA) is used in the manufacture of PMMA, acrylic sheets, surface coatings, emulsion polymers and adhesives. (Source: REX/Shutterstock)

By Yiting Tang