Amid Lacklustre Demand, European PMMA Prices Decline Further, Bearish Outlook in Early 2024

Germany, (Hamburg): In 2023, European Polymethyl Methacrylate (PMMA) markets faced challenges due to the persistent impact of declining demand, resulting in consistently reduced operating rates in key downstream industries influenced by sluggish global economies. It is anticipated that the European PMMA market will encounter challenges again in 2024 as subdued economic growth and oversupply weigh on PMMA.

According to the latest ChemAnalyst database, prices of PMMA in the German market witnessed a significant decrease of USD 204/MT during the last quarter of 2023. The feedstock Methyl Methacrylate prices also observed a decline amid continued weak demand, leading to the lower manufacturing cost of PMMA and supporting the downward trend in PMMA prices in the domestic market. Regarding domestic production, manufacturing firms did not operate at full capacity as demand from the downstream industry had not yet improved across the domestic market. On the other hand, according to federal statistics, German industrial production unexpectedly decreased by 0.7% in November 2023, indicating a deterioration in new orders. Market players speculate that economic uncertainty and weak operating rates are expected to limit prospects for a PMMA recovery in 2024.

Additionally, German inflation rebounded in December due to base effects, temporarily halting the downward trend seen in the previous months and possibly providing the European Central Bank with an argument in favor of keeping interest rates steady for some time. The rise in inflation has further eroded the purchasing power of consumers. Meanwhile, demand for PMMA from the downstream derivative industry, notably automotive and construction, has remained inactive ahead of the off-season dullness. Spot market transactions were also flat, as the enthusiasm of terminal firms to enter the market was not strong. These factors led to bearish market sentiments for PMMA among manufacturers. According to Kraftahart-Bundesamt, Germany saw 241,883 new car registrations, down by 23% year on year. The decline in sales was caused by the early withdrawal of the environmental bonus for electric vehicle (EV) purchases, consequently impacting the demand for PMMA. Additionally, the year-end destocking season prompted manufacturers to release inventories at discounted prices, exacerbating the downward pressure on PMMA prices. As a result, prices of PMMA FD Hamburg were settled at USD 3195/MT during December 2023.

Looking ahead, ChemAnalyst expects that PMMA prices might decrease in Q1 of 2024 due to further expectations of a decrease in feedstock Methyl Methacrylate prices. In addition, demand from the downstream automotive and construction industry may not increase suddenly in the first quarter of 2024; however, it is projected that demand recovery will be in the second quarter of the year. Additionally, the European market is likely to remain sensitive to inflationary pressure and other macroeconomic factors that might impact the pricing and market dynamics of PMMA in the coming months.