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PMMA: IN THE GRIP OF A DOWNWARD SPIRAL

September 13, 2019

LONDON (GC Intelligence) – Polymethyl Methacrylate (PMMA) in Europe remains soft on the back of low demand and high supply. Market conditions are expected to deteriorate further in the last few months of 2019.

For more than a year the market has been slowing down and in 2019 this trend has gathered pace.

Market conditions so far in September are arguably worse than they have been at any time during 2018 and 2019.

Before the current downward trend began, a number of unexpected production issues, which took place during a period of good demand, tightened the market.

The global supply of PMMA had become so tight that prices spiked to record high levels for many buyers.

As the global economy started to slow down in 2018, new capacity was added, for example in Saudi Arabia, and there was an absence of supply issues, prices started to fall.

The decrease in PMMA prices from their peak has been approximately €1000/mt; for extrusion grade the decreases were even more than this.

This rapid deterioration in market conditions has left buyers with high inventories and unable to take in more volumes even if prices decrease further.

The feedstock methyl methacrylate (MMA) meanwhile throughout this period, namely during tightness and then oversupply, has been higher than PMMA for many participants.

MMA spot prices are currently around €200/mt below MMA contract prices, but despite this they are still higher than the lowest priced PMMA.

This means that market participants have been running some of their production at a loss.

To mitigate this, they have moved to produce other higher margin PMMA products, such as cast sheets for example, or concentrating more on the coatings and paints sector.

Such shifts, however, have done little to improve the situation as the slowdown in construction and automotive continues to hit both the PMMA and the paints industry.

With the seasonal slowdown of the autumn and winter, demand will most certainly be even lower in Q4.

PMMA prices will surely not rebound before the end of the year, but even the start of 2020 looks rather bleak.

With the global economy treading on thin ice, tariff disputes in a stalemate, and Brexit keeping the UK and other European economies in a permanent state of uncertainty, the outlook remains very negative indeed.

The automotive sector has struggled to stop the decline in demand. Construction has also been bad and is set to slow down further. The retail sector and household goods, which have been resilient up to now, have also been slowing down lately.

This year has proven to be a particularly bad year for PMMA producers who have seen margins shrink at a very fast pace.

The ongoing and worsening economic headlines suggest that the bottom may not have been reached yet.

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