A combination of factors are supporting MMA prices in Europe. But for now the gains are modest amid heightened uncertainty over the virus.
Methyl Methacrylate (MMA) spot prices in Europe are on the increase, gathering momentum in August. For months MMA prices have bene under pressure due to increased supply and poor demand for PMMA and the paint industry.
However, during the past few weeks the trend has changed and there has been some support. There was no single factor that was supporting prices but more of a combination of events that was leading to higher prices.
The increases in August were nevertheless modest, at around €50/mt, taking prices close to mid-€1300/mt. Some market participants also report prices above €1400/mt. What is more, one seller was asking for prices substantially above these levels. But for now, it appears that these price levels have not been accepted.
One of the reasons for the increases is better demand. Demand for PMMA has been holding up well as it has been a product extensively used to protect people against the virus. But in the past few months, demand decreased in other market segments such as automotive, construction etc. And now, while demand is still good for protective sheets, it is improving for all other markets, including automotive.
Besides demand, costs are also pushing up prices. The pandemic has decreased the demand for phenol derivatives. The reduced production caused a reduction in its co-product acetone supply and caused a tight markets and higher prices.
The current developments in costs and demand are helping to lift MMA prices from the bottom reached recently. However, it is unlikely that a rally will follow. This is because demand while improving is still subdued in many markets. It is lower than it was this time last year. This is certainly the case for automotive, but also other markets such as construction, consumer goods, household goods and office equipment.
Paint industry demand
The increase in activity in the construction sector also meant that demand from the paints industry is increasing. However, the spike in paint demand because of high DIY activity during lockdown has slowed in recent weeks according to market participants.
As such, while it seems that the worst period in terms of demand has passed, a recovery is probably going to be a shallow one. Many segments are improving but are still operating far below last year’s levels. And with much uncertainty ahead, investment in new projects is low and likely to keep MMA demand and prices soft for the foreseeable future.