Asia MMA markets slip from record highs after 12 weeks of stability

SINGAPORE (ICIS)–Asia’s methyl methacrylate (MMA) spot prices have slipped from record highs following twelve weeks of price stability, snapping the uptrend observed over the past two years.

MMA markets in Asia have risen significantly across 2018 by around 9-11% for small cargoes and bulk cargoes, before reaching peak levels between June and August.

Import prices for bulk cargoes of 500 tonnes or more were pegged at $2,750/tonne CFR (cost & freight) SE (southeast) Asia on average in August, lower compared with the $2,470/tonne CFR SE Asia in January, according to ICIS data.

Given that spot prices were relatively unchanged for nearly three months, there was a looming question about whether MMA had reached a peak.

Buyers and sellers held mixed supply views in the same period.

For the week ended 7 September, regional MMA prices for small cargoes of 20-300 tonnes dropped to an average of $2,875/tonne CFR SE Asia, according to ICIS data.

Spot prices for bulk cargoes of over 500 tonnes fell to an average of $2,700/tonne CFR SE Asia, ICIS data showed.

On the demand front, sustained losses in downstream markets such as polymethyl methacrylate (PMMA) exerted further downward pressure on MMA in Asia, especially with the narrow spread between PMMA and MMA.

Buying momentum slowed down slightly amid the US-China trade tensions, which may change trade flow and import costs if tariffs set in for related products.

Some consumers are likely to hold back and watch the situation.

Regional supply is seen as largely mixed. Some suppliers were unable to offer much spot volumes and allocated limited quantities to regular users, in order to hold sufficient inventories for ongoing and upcoming planned turnarounds.

The series of planned turnarounds across the quarter would result in lowered production, but affected producers are typically expected to have prepared sufficient material for the respective shutdowns.

From a production perspective, the successful start-ups of two new Middle East units was a key development for the MMA industry.

“The Saudi Arabia plants have been running smoothly for several months, although with minor hiccups along the way. This is a change that will actually impact the market, different from the time early this year when there were more speculations about increased supply,” a market participant said.

In terms of trade flow, tightness in US markets could prompt some buyers to seek cargoes from Asia.

“Although the prices in US are higher than those in Asia, other markets such as Europe and Asia have shown signs of weakening. The long shipping time required [to US] would also make people think twice about purchasing from Asia,” a trader said.

In Europe, domestic supply is currently balanced whereas demand has been either in line or below expectations, with spot prices broadly on a downtrend.

Weak China domestic sectors, on the other hand, may translate in exports going towards the rest of Asia, sources said.

The supply-demand balance could be easily tilted, depending on key factors such as downstream performance, regional production levels and price fluctuations in different global markets.

Industry participants are expected to remain cautious and observe whether further price decreases would be sustainable in Asia.

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

(Top image: PMMA Iis widely used to make television screens)

Focus article by Kheng Wee Loy