Asia MMA Drifts Lower as Demand Recovery Remains Uncertain
SINGAPORE (ICIS news)--Asian methyl methacrylate (MMA) has remained under pressure due to uncertainty over the recovery of demand in the next quarter and climbing inventory levels in some countries, MMA buyers and sellers said on Friday.
Although the inventory overhang has eased in Taiwan and southeast Asia, and most buyers have drawn down on their existing supplies, MMA stocks in Japan are quite high because of weak demand from a key market - the country's domestic automotive sector, said regional producers.
The slump in global demand has been hurting the automotive industry, which is a major end-user of engineering plastics like polymethyl methacrylate (PMMA), a derivative of MMA.
Japanese producers looking to clear inventories before their financial year ends in March were also weighing heavily on Asian MMA prices, market sources said.
MMA March isotank cargoes were hovering around $1,650-1,700/tonne (€1,287-1,326/tonne) CFR (cost and freight) SE (southeast) Asia, about $100/tonne lower from levels seen at the beginning of February and down more than 35% from the peak in September 2008.
Some sellers said there was some buying interest this month but mostly to prop up inventories and replenish stocks, with some demand coming from the downstream transparent acrylonitrile-butadiene-styrene (ABS) sector. ABS is used in making flat screen LCD TVs.
“Demand from LCDs has increased somewhat but not a lot, and demand for the second quarter remains uncertain," he added.
Demand from the cast sheet segment was also sluggish, according to south east Asian buyers.
Competitively priced MMA from the US or Europe has also dampened the sentiment in Asia, added a northeast Asian MMA trader.
MMA prices in Europe were pegged at around $1,600 CFR, lower than Asian prices because of the weakening of the euro against the US dollar and poor demand in Europe, market sources said.
MMA traders said China saw limited recovery in buying activity in February after a bleak December and January as some local producers were trying to raise domestic prices.
“But with nearly 5,000-6,000 tonnes of cargoes sold to China for March arrival at prices around $1,450-1,500/tonne CFR China, buying sentiment has softened again and buyers are reluctant to keep inventory," said a Chinese MMA producer.
Several regional and deep-sea producers have chosen to sell to China to reduce their own inventories, the producer added.
Because of the continued weak environment, most Asian MMA producers have reduced their operating rates by either keeping some or all of their production shut for several months or by a start and stop strategy whereby the plants run for a few weeks and then stop for a few weeks.
This has helped bring inventory levels of producers under control in Taiwan, Singapore and Korea.
"We hope that MMA prices are now close to a bottom but it's difficult to predict this with any certainty," said a regional trader.
Key MMA producers in Asia include Mitsubishi Rayon Co, Sumitomo Chemicals, Lucite, Formosa and LG-MMA.
Although the inventory overhang has eased in Taiwan and southeast Asia, and most buyers have drawn down on their existing supplies, MMA stocks in Japan are quite high because of weak demand from a key market - the country's domestic automotive sector, said regional producers.
The slump in global demand has been hurting the automotive industry, which is a major end-user of engineering plastics like polymethyl methacrylate (PMMA), a derivative of MMA.
Japanese producers looking to clear inventories before their financial year ends in March were also weighing heavily on Asian MMA prices, market sources said.
MMA March isotank cargoes were hovering around $1,650-1,700/tonne (€1,287-1,326/tonne) CFR (cost and freight) SE (southeast) Asia, about $100/tonne lower from levels seen at the beginning of February and down more than 35% from the peak in September 2008.
Some sellers said there was some buying interest this month but mostly to prop up inventories and replenish stocks, with some demand coming from the downstream transparent acrylonitrile-butadiene-styrene (ABS) sector. ABS is used in making flat screen LCD TVs.
“Demand from LCDs has increased somewhat but not a lot, and demand for the second quarter remains uncertain," he added.
Demand from the cast sheet segment was also sluggish, according to south east Asian buyers.
Competitively priced MMA from the US or Europe has also dampened the sentiment in Asia, added a northeast Asian MMA trader.
MMA prices in Europe were pegged at around $1,600 CFR, lower than Asian prices because of the weakening of the euro against the US dollar and poor demand in Europe, market sources said.
MMA traders said China saw limited recovery in buying activity in February after a bleak December and January as some local producers were trying to raise domestic prices.
“But with nearly 5,000-6,000 tonnes of cargoes sold to China for March arrival at prices around $1,450-1,500/tonne CFR China, buying sentiment has softened again and buyers are reluctant to keep inventory," said a Chinese MMA producer.
Several regional and deep-sea producers have chosen to sell to China to reduce their own inventories, the producer added.
Because of the continued weak environment, most Asian MMA producers have reduced their operating rates by either keeping some or all of their production shut for several months or by a start and stop strategy whereby the plants run for a few weeks and then stop for a few weeks.
This has helped bring inventory levels of producers under control in Taiwan, Singapore and Korea.
"We hope that MMA prices are now close to a bottom but it's difficult to predict this with any certainty," said a regional trader.
Key MMA producers in Asia include Mitsubishi Rayon Co, Sumitomo Chemicals, Lucite, Formosa and LG-MMA.
source: www.ICIS.com
