Taking a closer Look at
the Methacrylates Markets
The EMEA methacrylate monomers team is passionate about delivering added value to its customers and industry partners in the merchant market. To be effective in what we do requires us to continually invest time and energy into understanding the marketplace and its dynamics. Our local representatives in the field, together with our world-class business systems, mean we have the best possible access to reliable information to do just that. As part of our regular review we share our market knowledge with you.
Report by: Malcolm Kidd, Commercial Director for Methacrylate Monomers EMEA. October 2017.
Challenging Market Conditions
In the previous issue of FreeFlow (April 2017), I was describing the situation that the EMEA region had already been experiencing for some months: a significant reduction in the import volume of methacrylate monomers, most notably MMA, and that this, plus some production shortfalls from European assets, had tipped the market into a more tightly balanced position. What transpired through Q2 proved to be a very challenging time for the industry with a structural shortage of methacrylate products being experienced in the region for several months. And what has happened since then, but what was not so widely predicted, is that the tight market situation globally, and hence also in the EMEA region, has continued largely unabated through Q3.
The MMA supply / demand balance in Asia has been tight since the start of 2017 – a combination of sustained strong demand from the main application segments across the region compared to availability of material. Inventory levels have remained consistently low and the market has therefore been tightly balanced and very reactive and responsive to any subsequent unplanned events.
As a consequence, the EMEA region has found it difficult to source reliably (and affordably) the volume of imports that was required to supplement European production. Imports from Asia did start to arrive early in Q3, but have thus far proven to be insufficient to help fully satisfy the demand being generated by opportunities identified by the customer base. The terrible circumstances recently in the US Gulf region have resulted in huge disruption to the US chemicals industry and unfortunately a further tightening of the North American MMA market. The global industry is responding by diverting available material to the region. There will therefore continue to be a strain on MMA availability globally and in the EMEA region for the next few months until full production in the US has been restored and inventories there re-established, at which point the normal global trade flows can be resumed.
Demand Picture is Robust
It has been difficult to detect any of the normal seasonality in demand thus far this year. Demand in the supposedly quieter summer months has not been apparent as the underlying requirements have been supplemented by unfulfilled demand from earlier in the year and the need to replenish safety stock and working inventories that had become depleted through Q2. The LI sales team has continued to visit customers regularly during this period, to communicate our views on the market but primarily to understand our customers’ perspective, and the challenges and the opportunities that they are being presented with. The encouraging news is that demand levels for methacrylates are reported to be good, with a positive outlook also for the remainder of 2017 and even talk of double-digit year on year growth in some application areas. The outlook for next year is also being projected by the majority in a positive way.
Supply Side Performance
There have been a large number of unplanned outages at MMA assets around the world in addition to the planned events that are required for essential maintenance activities. These seem to have been due to a variety of reasons and have resulted in a generally lower availability of material than had been anticipated. This may not have had such an impact had global demand not been so strong, and it remains to be seen if this is what is now a prolonged transient or the new normal for the industry.
There continues to be investment in new capacity, which is much needed to meet the continuing growth in demand. At the time of writing, the start-up of Mitsubishi Chemical’s JV MMA asset in Saudi Arabia using LI’s “Alpha” technology is eagerly anticipated and is a very visible demonstration of the company’s ongoing commitment to the methacrylate’s industry, which is particularly relevant given the challenges of the last few months.