Methyl methacrylate (MMA) the raw material used to produce a wide range of products distributed by IAPD members, is experiencing another year of price volatility that will impact all links in the supply chain. Multiple factors are contributing to the uncertainty but one part of the equation that you can count on is that, MMA and the products it creates, are now truly part of a global market.
In short, a tightening global MMA supply chain will continue to spur price creep for the first half of 2018 and could pose actual supply issues for certain buyers.
What happens in Singapore and Germany now impacts prices in Indianapolis and Houston – and that’s without beginning to consider the regulatory changes that China is imposing on itself and the world.
At the end of 2017, China enacted restrictions on the import of scrap material drying up the domestic supply of recycled plastic. Chinese manufacturers, whose production was based on about 70% recycled material, suddenly faced shortages and turned to the virgin MMA markets for relief. They did not find it. Luckily, the Chinese New Year gave the world some breathing room but when those manufacturers came back on line at the end of February, we experienced the first price spike as March demand increased and Chinese MMA imports doubled in April.
The situation was further exacerbated by plant shutdowns, for a variety of reasons that started in April and will continue through May.
Asia is seeing 8 MMA plant shutdowns: Thailand – Mitsubishi Thai MMA; South Korea – Lotte Chemical; Taiwan -KMC; Japan –MRC Otake; Singapore -Sumitomo; China – MRC, China Jilin Chemical, and China Sheng Hong Chemical.
Europe is seeing 2 MMA plant shutdowns: UK – Lucite & Germany – Evonik Germany.
The new MMA plant in Saudi Arabia, which was supposed to ease the pressure, has diverted the bulk of their production to European manufacturers and will not make a significant contribution to global supplies.
Most MMA buyers will again be looking at lower inventories, higher prices and reduced quantity allocations for May shipment. The supply/demand imbalance will take some time to recalibrate and we do not anticipate prices to stabilize before mid-year. Even the U.S. has become a net MMA importer.
Producers who have locked in solid MMA supply contracts will have some supply security even though they may still experience reduced quantity allocations and price hikes. Spot buying opportunities will be few or nonexistent.
Whether you are a CEO, CFO or PM, timing your purchases over the next few months will require a keen eye on the long term trends. While many factors affect one vendor’s same day quote against another, all vendors will be at the mercy of MMA suppliers again in the near term.
MARGACIPTA, Asia’s largest cell cast manufacturer, closely monitors MMA prices on a regular basis in order to provide our clients with the latest pricing data. Keep in touch with us or your sales reps as you manage your inventory positions and make smarter purchasing and marketing decisions possible.
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