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SubjectAcrylic World Newsletter - Nov. 2024
Published Date2024/11/1
Content

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MARKET OVERVIEW

In November, demand for MMA across Asia has generally weakened, shrinking by approximately 30~40%. This decline is largely attributed to ample inventory levels and a sharp MMA price drop of US$300/mt in October. As a result, most buyers have scaled back their MMA offtakes, opting for a purchase-as-needed approach and reducing contractual volume, expecting prices to fall further amidst ongoing economic uncertainties. MMA prices are anticipated to decrease by an additional US$50~100/mt for November shipment. The market is also grappling with the effects of escalating conflicts in the Middle East and heightened tensions on the Korea Peninsula. Increased Israeli military incursions into Lebanon, along with widespread bombing, have triggered responses from Hezbollah and other regional allies. On 15th of October, North Korea bombed sections of the Gyonggui Line and Donghae Line railways near the Military Demarcation Line (MDL) between the two Koreans, intensifying border tensions. In response, South Korea’s Joint Chiefs of Staff chairman, Kim Myung-soo, canceled his planned U.S. visit to prepare for and respond to possible further provocations from North Korea. Additionally, at the end of October, BRICS nations held a leadership summit in Kazan, Russia, with representatives from 36 countries participated, including 22 heads of state, to discuss key areas like financial and economic cooperation, regional development and security, environmental and climate initiatives, and strategies for addressing Western sanctions related to the conflict in Ukraine. Progress was also made toward resolving tensions between China and India. From a logistics perspective, major shipping companies announced a GRI that will add approximately US$1,000 to US$1,500 per 40-foot container – a rise of at least a 20% over current freight rate following China’s National Day holiday. This hike is attributed to increased export volumes, recent disruptions such as a three-day United States East Coast strike, and typhoons-related delays across Asia, which have collectively caused port congestion. Additional strain on demand and shipping schedules has also been impacted by strikes and issue in the Red Sea issue. For major east-west routes (including trans-Pacific, trans-Atlantic and Asia-Northern Europe and the Mediterranean), 100 flight cancellations have been confirmed for the weeks spanning 30th of September to 3rd of November, resulting in a 14% cancellation rate. In the U.S., the upcoming 6th of November elections have created some uncertainly, with businesses awaiting clearer market direction post-election. Ongoing trade tensions, inflation concerns and potential further Federal Reserve rate adjustments have heightened caution. Overall, the outlook for December remains conservative, with a slight downward trend anticipated.

FEEDSTOCK

On the feedstock side, the crude oil prices have shown volatility, initially rising due to the Israel-Iran conflict but later retreating due to U.S. diplomatic efforts to prevent immediate escalation and China’s absence of new stimulus measures, which dampened demand sentiment. Crude by 31st of October, international oil prices had dropped to the range of US$68-74 per barrel, with ICE Brent at US$72.55/bbl and WTI at US$68.61/bbl. Additionally, the geopolitical risks in the Red Sea continue to impact freight rates, while Russia’s ongoing conflict in Ukraine and market disappointment over China’s recent, vague stimulus announcement have added further market caution. Upstream, Asian naphtha prices slightly rose to US$650-700 pmt CFR NE Asia owing to reduced refinery output in China, tightening supply. Meanwhile, demand remains weak, with spot ethylene prices down to US$810-860 pmt CFR NE Asia, and propylene stabilizing at US$840-880 pmt CFR Taiwan. Acetone supply has increased because of higher phenol production, leading to a price drop to US$670-720 pmt CFR China. Methanol prices held steady at US$330-350 pmt CFR Taiwan, while MTBE prices dipped to US$730-780 pmt CFR Asia due to weaker demand and a pessimistic outlook. Sharply decreased costs in C3/C4 processing have impacted MMA prices amid a sluggish global economy. This economic softness is expected to continue affecting MMA pricing before 2025.

PRODUCTION AND MARKET

Europe: In Europe, the MMA spot market continues to experience price softness, driven by weaker-than-anticipated demand and an ample supply. The ongoing weak market balance has allowed buyers to benefit from feedstock cost reductions. Spot market dynamics remain consistent with October trends, where modest buyer interest is met with abundant material availability, resulting in discounts that reflect the slight excess supply. A seasonal reduction in fuel consumption further contributes to limited demand, particularly in key sectors like automotive and construction, both of which are still underperforming. Despite weak demand, MMA prices have seen minor support due to production costs and supply constraints, partially influenced by Trinseo's 90kpta MMA plant maintenance shutdown in Roh, Italy. This trend is expected to continue through October and likely the rest of the year. Although economic indicators suggest a slight improvement in 2024 compared to 2023, Oxford Economics recently downgraded the 2025 Eurozone GDP growth forecast by 0.1 percentage points to 1.5%, primarily due to slower industrial recovery in Germany. The slow recovery of the European petrochemical industry was a key focus at the 58th Annual Meeting of the EPCA, held in Berlin, Germany, from 7th to 10th of October 2024.

United States: despite MMA buyers' hesitation to commit to volumes, underlying economic data remains positive. According to Oxford Economics, the U.S. economic outlook has shown resilience, with Moneycorp's North American Product Director noting stronger-than-expected data, leading to a dollar rise. U.S. retail sales grew 0.4% in September, following a confirmed 0.1% increase in August, exceeding Reuters’ forecast of 0.3%. U.S. GDP growth projections are now at 2.3% for H2 2024, with an upgrade to 2.5% for H1 2025. A major positive factor supporting the U.S. petrochemical industry is the availability of domestic feedstocks, helping buffer against the price volatility seen in other regions. This significant price differential from Asia, along with rising freight rates, is expected to keep U.S. exports out of Asian spot markets in the foreseeable future. In terms of sector-specific trends, construction and appliances show a promising outlook, as anticipated interest rate cuts may reinvigorate these markets and boost residential spending. However, uncertainty surrounding the U.S. elections creates some industrial outlook ambiguity, with recent analyses attempting to assess the possible inflationary impact and economic growth potential based on each candidate's policies. MMA production is steady, with average operating rates for upstream acrylonitrile estimated at 66% in October, consistent with MMA production levels. Additionally, MCM is planning a two-week maintenance shutdown in October. On the development side, Röhm GmbH and OQ Chemicals are partnering to build a 250 kpta MMA plant in Bay City, Texas, utilizing Röhm’s LiMA technology, though the project has been delayed to Q1 2025. Overall, MMA supply and demand are expected to remain balanced in Q4 2024.

Asia: In Asia, MMA markets are expected to face a tough challenge, impacting profitability for both producer and consumer. Current market conditions mirror the heavy destocking seen at the end of 2008, as many downstream sectors are experiencing significant declines in demand. This environment trend is likely to increase pressure on sellers heading into November, with limited room for negotiation due to constrained margins. Buyers are anticipated to avoid stockpiling, making it challenging for both sides to navigate the market effectively. In terms of supply, MMA availability across Asia remains relatively balanced, with operating rates estimated at 50-60%. In Japan, producers such as MGC and Asahi Kasei have reportedly cut or halted production, coinciding with the yen’s recent depreciation, which dropped below 150 against the U.S. dollar. Mizuho Bank’s head of macro strategy expects a continued decline toward 152, given the limited likelihood of interest rate hikes by the Bank of Japan and the strength of U.S. economic data supporting the dollar. In Thailand, PTT Asahi Chemical’s (PTTAC) 75 kpta MMA plant is expected to stay offline from November 2024. Meanwhile, in Taiwan, Kaohsiung Monomer Co. (KMC) plans a 3-4 week maintenance shutdown for its 100 kpta MMA plant in Kaohsiung at the end of October, in coordination with the annual turnaround of the upstream CDPC acrylonitrile (AN) plant.

CHINA MARKET OVERVIEW

The domestic MMA market continues to struggle with a weak balance, as buyers closely monitor feedstock cost shifts. Spot markets reflect dynamics similar to October, with modest buyer interest amid an ample supply, and MMA price remain low, underscoring a slight oversupply. Many market participants expressed disappointment with the recent stimulus announcement from the Chinese government, citing a lack of detail and did unfulfilled expectations. Historically, producers benefitted from high MMA prices, especially in integrated facilities where MMA is produced as a by-product of acrylonitrile production. However, this advantage has largely dissipated following the recent sharp decline in MMA prices, putting additional pressure on profitability across the supply chain.

Looking ahead, a potential recovery in demand from the U.S. and Europe could become a crucial market driver, potentially leading to a significant price correction by year-end or in early 2025. When European and North American MMA prices exceed those in Asian, the increased demand can help offload volumes at favorable netbacks within the Asia market. In this scenario, European and North American prices may experience a slower rate of decline compared to Asian. Consequently, MMA prices in China may stay subdued without a strong rebound. The National Bureau of Statistics in mainland China reported Q3 GDP growth at 4.6% year-over-year, a slight decrease from 4.7% in Q2. Although recently announced stimulus measures could help cushion downside risks for next year’s growth, their immediate positive effects are limited, as market players will need time to regain confidence.

Reports indicate that overall acrylonitrile operating rate remained around 65-70%, reflecting restrained production across the MMA industry:

1.      major acrylonitrile producers: Key producers, including Jiangsu Sailboat, Shanghai Secco and Zhejiang PC, have continued operating at reduced capacities through October, aligned with cutbacks at MMA plants.

2.      Jiangsu Jiankun Chemical’s 150kpta MMA pant in Jiangsu is reportedly operating at low level.

3.      PetroChina Jilin 200kpta MMA plant remains offline due to scheduled turnaround for maintenance.

In light of persistently weak global demand, export purchasing has continued at a sluggish pace, underscoring the scarcity of new business opportunities in the current market climate.

DOWNSTREAM

On the PMMA side, the PMMA demand remains weak, primarily due to sluggish automotive sector activity. Additionally, China’s MMA prices have been on a downward trend for several consecutive weeks, reflecting ongoing declines in the market, coupled with seasonal slowdowns.In China, domestic demand has remained largely subdued due to unappealing production economics. A significant gap between buyer and seller price expectations has created a stalemate, with buyers cautious about procurement amid ongoing price declines. Feedstock MMA prices are perceived to have not yet reached the bottom in the yuan-denominated market, adding to the hesitancy. Upstream PMMA feedstock, methyl methacrylate (MMA), has continued its price decline in China by CNY 1,000-1,500/mt, now ranging from CNY 11,500-12,000/mt DEL. Concurrently, PMMA prices are reported between CNY 17,000-17,500/mt DEL. In Asia, PMMA supply and demand are expected to remain balanced, although the market is seasonally slowing ahead of the year-end. In Southeast Asia, spot prices for general-purpose (GP) PMMA have stabilized at US$2,300-2,400/mt CFR SE Asia.

On the acrylic sheet side, cast sheet makers have significantly scaled back production, resulting in a steep decline in MMA prices as they navigate ongoing economic challenges and high inventory levels amid weak market demand. These producers have raised concerns that MMA pricing reports do not accurately reflect current market conditions, as prices began to drop a month earlier than reported. The recent $400-$500/mt price decline has complicated order discussions, with customers now requesting additional discounts on existing orders. In Vietnam, cast sheet producers continue to operate at reduced capacity, focusing on destocking. Indonesia’s domestic market remains stable, but export demand has declined, with buyers procuring materials only as necessary. Meanwhile, Thailand’s domestic MMA supply appears balanced, although discussions indicate MMA prices below $1,600/mt CFR for isotank from Chinese producers.

Consequently, cast sheet prices are in the range of US$2.35~2.95/kg CIF.

On the resin side and others, resin demand has remained stable, with a slight uptick from the ABS sector as one major producer in East China started a new line post-National Holiday, while others have also ramped up production. Despite this, ABS operating rates remain low overall, with early indications that year-end destocking might shift from December to November. The outlook for ABS demand is sluggish as year-end approaches. In the acrylamide sector, demand has slightly reduced; a few producers have cut output due to weak demand, as some downstream end-users enter their off-season, keeping acrylamide prices relatively flat. Meanwhile, NBR sector demand has remained steady.

US$/mt       

 

November 2024 Price Range

October 2024 Price Range

Asia contract prices for cargos  200mt or more

-400

1,640~1,740

2,040~2,130

Asia spot prices for 20~200mt

-400

1,650~1,700

2,050~2,100

 2024 11.pngprice change.png

If you need more information or quotation, please contact with spencer_hsieh@borica.com or john_chang@borica.com 






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