Asia MMA Slows Price Fall but Demand Remains Slack
By Anu Agarwal
SINGAPORE (ICIS news)--Rising feedstock costs and difficulties in covering fixed costs at current dismal operating rates prevent Asian methyl methacrylate (MMA) makers from reducing prices further although demand recovery has yet to happen, buyers and sellers said on Friday.
A big question remains whether demand will improve in the next few months or take much longer than that to occur in this economic downturn, they said.
“Feedstock prices like naphtha, acetone and MTBE (methyl tert-butyl ether) are rising and at operating rates of less than 50%, it’s difficult to cover fixed costs,” said a northeast Asian MMA producer.
“With demand in February looking somewhat better than December, we will try to roll-over March prices,” he said.
Besides, inventories with some sellers are quite low, given the drastic reduction in output across the region.
MMA prices, currently in the low $1,700s/tonne (€1,326/tonne) CFR (cost and freight) Asia for isotank cargoes, were down nearly 30% from the peaks seen in the third quarter of 2008.
The sudden collapse of all key downstream sectors such as automotives, electronics such as flat screen TVs and computer monitors, as well as household and construction, caused prices to tumble, market source said.
“If companies like Panasonic, NEC and Sony are laying off a historic number of workers then who can avoid the impact of poor demand?” said another regional MMA producer.
“But we have reached a point where further price reductions may not bring additional buyers to the market,” he added.
MMA traders and buyers said that pricing is still on a downward trend although price falls are now beginning to slow down and might bottom out by March.
However, no one would was willing to bet on a quick demand recovery.
In the key downstream application - polymethyl methacrylate (PMMA) makers had been forced to cut output and prices as auto sales worsened and electronic products like LCD TV demand fell of a cliff.
PMMA prices had fallen to $1,850-1,940/tonne CFR China and visibility for medium term demand remained murky.
Commodity polymers like polyolefins have a wide range of applications and demand has rebounded to some extent, but for engineering plastics like PMMA that depend on demand for big ticket items like cars, TVs and home appliances, it still remains a tough time, said regional MMA traders.
Other applications of MMA like cast sheets and emulsions for paints and coatings were also weak, bearing the brunt of a slowdown in the construction sector.
SINGAPORE (ICIS news)--Rising feedstock costs and difficulties in covering fixed costs at current dismal operating rates prevent Asian methyl methacrylate (MMA) makers from reducing prices further although demand recovery has yet to happen, buyers and sellers said on Friday.
A big question remains whether demand will improve in the next few months or take much longer than that to occur in this economic downturn, they said.
“Feedstock prices like naphtha, acetone and MTBE (methyl tert-butyl ether) are rising and at operating rates of less than 50%, it’s difficult to cover fixed costs,” said a northeast Asian MMA producer.
“With demand in February looking somewhat better than December, we will try to roll-over March prices,” he said.
Besides, inventories with some sellers are quite low, given the drastic reduction in output across the region.
MMA prices, currently in the low $1,700s/tonne (€1,326/tonne) CFR (cost and freight) Asia for isotank cargoes, were down nearly 30% from the peaks seen in the third quarter of 2008.
The sudden collapse of all key downstream sectors such as automotives, electronics such as flat screen TVs and computer monitors, as well as household and construction, caused prices to tumble, market source said.
“If companies like Panasonic, NEC and Sony are laying off a historic number of workers then who can avoid the impact of poor demand?” said another regional MMA producer.
“But we have reached a point where further price reductions may not bring additional buyers to the market,” he added.
MMA traders and buyers said that pricing is still on a downward trend although price falls are now beginning to slow down and might bottom out by March.
However, no one would was willing to bet on a quick demand recovery.
In the key downstream application - polymethyl methacrylate (PMMA) makers had been forced to cut output and prices as auto sales worsened and electronic products like LCD TV demand fell of a cliff.
PMMA prices had fallen to $1,850-1,940/tonne CFR China and visibility for medium term demand remained murky.
Commodity polymers like polyolefins have a wide range of applications and demand has rebounded to some extent, but for engineering plastics like PMMA that depend on demand for big ticket items like cars, TVs and home appliances, it still remains a tough time, said regional MMA traders.
Other applications of MMA like cast sheets and emulsions for paints and coatings were also weak, bearing the brunt of a slowdown in the construction sector.
In the medium term, operating rates at regional MMA facilities may remain low as producers continue to balance the fall in demand with production cuts.
source: www.ICIS.com
