If you want to read via
the website, please click the link "http://tempuri.org/tempuri.html"
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
|
If you need more information or quotation, please contact with spencer_hsieh@borica.com or john_chang@borica.com