Taking a closer Look at
the Methacrylates Markets
AS PART OF LUCITE INTERNATIONAL’S COMMITMENT TO CUSTOMERS IN THE METHACRYLATE MONOMERS MERCHANT MARKET WE SHARE WITH YOU OUR VIEWS OF CURRENT DYNAMICS. LOCAL KNOWLEDGE COMBINED WITH OUR GLOBAL OPERATIONS, BACKED BY WORLD-CLASS SYSTEMS HELP TO ENSURE THE ACCURACY OF THIS INFORMATION, WHICH WE PUBLISH REGULARLY BOTH ON LINE AND FREEFLOW MAGAZINE
Report by: Malcolm Kidd, Commercial Director for Methacrylate Monomers EMEA. September 2016.
A change of direction
At the time of writing for the previous issue of FF (March 2016), the MMA market was emerging from a pronounced fall-off in demand (de-stocking) and a corresponding reduction in market pricing. While it seemed at the time that the market was becoming more balanced, it was early days. Moving on almost six months it is clear that this was indeed the start of a change of direction, and the market certainly feels very different at this moment in time than it did then.
Since the start of 2016, demand from the plastics segment (pMMA, and cast and extruded sheet) has been strong. Initially this was believed to be largely due to the requirement for re-stocking throughout the downstream chain, but demand has continued to be healthy with the construction, automotive and retail sectors all contributing positively. The outlook is also continuing to be quite positive.
The surface coatings segment typically experiences peak demand during the months of March to July, and has also performed well this year; perhaps not reaching the maximum monthly demand seen in some previous years, but being consistent and certainly sustained over this period. And the outlook is that it will continue to perform well (compared to previous years) for at least the next few months. Demand in this segment in Europe can be heavily influenced by the weather, as the majority of derivative products are used for exterior applications.
While there continues to be much variety in the weather from week to week and from location to location, it has been much more favourable recently compared to the wetter start to the year, which has been a positive. Therefore, overall, for the first six months of the year, the merchant MMA market in the EMEA region is estimated to be running almost 3% ahead of the same period in 2015, and with a positive outlook for the remainder of the year.
Supply side issues
Recently the supply side has been suffering from a number of unplanned outages at various facilities around the world. Technical problems and lack of feedstock availability have resulted in reduced production capabilities at some assets, some of which are taking months to be fully resolved. These issues, along with the demand picture, have turned the previously balanced market into one of tightness where inventories will continue to be low for a period of time.
The general economic landscape is not too volatile at the moment; certainly not when compared to the changes that have occurred over the last 12 months. Economic sentiment is still not strong, and the outcome of the UK vote on Brexit has not helped in this area. Concern therefore remains on the slightly longer time horizon as to how markets can develop and demand will grow. Although Sterling has been significantly weakened, the Euro/US$ rate has remained relatively stable, and this is a key factor for determining the relative balance of EU imports and exports. Crude oil prices have recovered from the depths reached in Q1 to the range of $40-$50/bbl. As a consequence feedstock costs for the manufacture of MMA have risen accordingly during this period. Since then the oil price has continued to oscillate within this range. For now, at least, things look relatively stable on this front.
The short-term outlook is that the current market dynamics seem set to continue for some months to come. Looking to the longer term, and into next year, is more difficult.
New MMA capacity is planned to come on line in Asia and the Middle East, which will change the dynamics and the flow of product within the industry. However, and as we are seeing, the demand for methacrylate monomers and their derivatives continues to grow ahead of GDP growth, which requires the industry to invest in new and efficient capacity. It will be interesting to give an update in six months’ time on what changes we have seen in the MMA market in the next issue of FreeFlow.