Europe MMA November contracts continue to fall on weak market conditions

LONDON (ICIS)–European methyl methacrylate (MMA) November contract talks are ongoing but a range of double-digit decreases have already been agreed on the back of weak market fundamentals.

Spot prices were stable this week, despite continued downward pressure in Europe as sellers are becoming increasingly cautious about year-end inventory.

Supply remains long, with material more than adequate in the region, despite the ongoing lower operating rates, and slowing demand.

November contracts discussions will conclude next week, with ongoing pressure spilling into next month’s discussions.

While it is early for December pricing targets, decreases are still being discussed by both sides of the market, with the month traditionally weaker for the sector.

WINTER BITES
Coatings demand will fall further into December, with some applications not possible in colder temperatures.

Plastics demand will also fall, and some businesses will close over the festive period, limiting the time for deliveries.

Players will also be managing working capital closely; however, on the plastics side the supply chain is already quite low, and has been since the middle of the year.

Contract terms for 2020 are under negotiation, which makes it an interesting time for the market, as sellers position to maintain, increase and, in some cases, protect market share.

The market will be even more competitive in 2020, and consumers have a high number of offers from sellers, in what can clearly be defined as a buyers’ market going into 2020.

However, while traders are looking to increase their presence in the market, buyers demand supply security, and this will still be the priority for next year.

There is expected to be more action on the spot market in 2020 as buyers move back to a more traditional contract/spot spread of 80/20.

Spot prices were stable this week, as sellers largely held firm, and did not succumb to continued pressure from buyers to decrease offers.

However, pressure from Asian sellers is increasing, and this is likely to factor into discussions more in the coming weeks.

EUROPE MMA SPOT PRICES

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Thumbnail picture source: Carsten Leuzinger/imageBROKER/Shutterstock

Focus article by Katherine Sale