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PMMA: Weak Demand pushing Q2 prices down

April 9, 2019

London (GC Intelligence) — The major driver pushing down polymethyl methacrylate (PMMA) prices is the current decrease in demand. There is overwhelming evidence that PMMA demand is weakening.

Data from the automotive sector is still negative. Passenger car sales from European Automobile Manufacturers Association (ACEA) were once again down, decreasing 1% in February 2018 compared to February 2019. Market feedback confirms that this situation has not change in March and April.

The construction sector is also weak. During this time of the year, demand is expected to pick up. The ongoing decrease in prices, economic uncertainty and low demand downstream so far seems to have blunted any seasonal recovery.

What is more, Europe is experiencing a long winter which is keeping demand from this market segment low.

At the same time, the overall economic picture remains gloomy, with a slowdown in growth in Germany, ongoing tariff wars, with the latest threats from the US to impose tariffs on Europe and continued uncertainty over Brexit.

PMMA prices in 2017 and 2018 spiked as result of good demand and supply shortages. This trend has reversed since the end of 2018.

The recent trade data shows that imports are likely having little impact on European prices. According to the data imports in January were the lowest since the past three years. This is most likely due to the ongoing decrease in demand and the increase in supply in Europe.

There was an increase seen from Saudi Arabia during this period as it was expected, since new production in the country started last year. However, volumes are small and it is understood that prices are not too competitive and are closely aligned with European prices.

While overall trade volumes are small and therefore likely to have little influence on prices, they nevertheless are contributing to the current downside.

Prices of the feedstocks MMA are also going down. While this also has an influence on PMMA prices, it is not a major factor. Up until recently when demand was still relatively good, sellers were reluctant to reduce prices as a result of lower MMA costs. It was when PMMA fundamentals weakened, particularly demand, that PMMA prices started going down.

A PMMA price recovery in 2019 is becoming less likely. In fact, given current developments, there is more of a chance that prices will continue to fall in 2019.

PMMA: EU28 Trade Data (MT)