Asia methyl methacrylate production margins squeezed by low demand, high feedstock cost

Methyl methacrylate, or MMA, producers in Asia are hit by low demand and high MTBE feedstock costs that have squeezed production margins and reduced their revenues, the producers said Thursday.

The price of MMA has slumped to $2,000/mt CFR Southeast Asia, down 20% from $2,500/mt CFR in the first quarter of the year, they added.

MMA prices were dragged lower by a slump in demand for downstream polymethyl methacrylate, or acrylic glass, which is used for products such as LCD screens and transparent ABS, market sources said.

Upstream, tight supply and strong gasoline blending demand boosted MTBE prices towards the end of Q3 2011. Platts assessed MTBE at $1,090/mt FOB Singapore on November 10. The Q1 average of Platts daily MTBE assessments was $1,017.08/mt and Q3's average was $1,130.92/mt, an increase of 11% from Q1.

"In general, the market demand for MMA has slowed down. Unfortunately towards Christmas we don't see an increase in demand and the economic gloom is not helping at all," said a source from Singapore-based MMA producer Sumitomo Methyl Methacrylate.

"China, the biggest MMA market, has taken a big step in terms of tightening their credit policy so the buying and selling of consumer goods in the country has gone softer," he added.

A source from China-based Evonik Degusa said the high exposure of MMA producers to energy market fluctuations, via MTBE, makes the unit cost for MMA producers highly volatile. This was unfortunate considering that MTBE demand for MMA used in the petrochemicals sector is only a small portion of overall MTBE demand, he added.

Market sources said that MMA constitutes less than 10% of the entire demand for MTBE while producers said they require 1.5-1.6 mt of MTBE to produce 1 mt of MMA.