Impending Supply Limitations Keep PMMA Prices Lifted in Europe in August 2024

Hamburg, (Germany): During the third week of August, Polymethyl Methacrylate (PMMA) prices continued facing pressure across the European market. Even though trading activity turned sluggish amid the ongoing seasonal lull with most market participants staying away from business activities, prices gained owing to supply constraints. Current pricing trends are chiefly being determined by supply-side factors with the regional market experiencing reduced import shipment inflows. Market observers anticipate a fall in import volumes toward September's end.

Prices of PMMA have significantly increased in the German market on account of supply disbalances. The feedstock Methyl Methacrylate prices have been observed on the higher end, resulting in the high production cost of PMMA in the domestic market, leading to an upward shift in the price realization of PMMA. In addition, the domestic supply of PMMA remains tight, with producers operating at reduced rates and several manufacturers have shut down their plants for maintenance turnaround amid summer seasons. Moreover, the supply situation has further deteriorated amid the lack of competitive offers from Asia and the US. The ongoing rally in freight rates from Asia to Europe amid the prolonged risk in the Red Sea as well as the disruptions of exports out of the US following the Beryl Hurricane has been constraining the import flow from these exporting markets to the bloc. As per the market sources, the average shipping cost for a 40-foot container from South Korea to Europe rose to 8.08 million won, up 39.2 percent over the same period, keeping the prices elevated. Thus, prices of PMMA FD Hamburg were settled at USD 3807/MT with a week-on-week increment of USD 150/MT during the week ending 16th August.

However, the domestic demand for PMMA from the key downstream automotive, construction, and electronic industries has continued to remain tepid with limited instances of new orders reported by market players. The German construction Purchasing Manager Index was observed below the threshold level (i.e., 50), indicating a contraction in construction activities. Nonetheless, it had a minimal impact on the prices of PMMA in the domestic market. On the other hand, high interest rates continue to impact disposable incomes and spending on large-scale projects such as home improvements and high-end infrastructure construction projects, as governments also continue to restrict expenditure amid high financing costs, dampening the demand for several commodities including PMMA. Even though interest rates have decreased in recent months, more than just one interest reduction would be required to stimulate demand.

Looking ahead, ChemAnalyst anticipates PMMA prices might remain firm across the European market as converters will likely replenish their material stocks in anticipation of forecasted price increases in the forthcoming weeks. In addition, the demand from the downstream industry is expected to recover after the summer downtime, which may keep the prices upward in the regional market. Furthermore, production cost is projected to increase in the hope of a rise in feedstock MMA prices. Also, freight rates from Asia to Europe may remain elevated amid the peak season which may further boost the prices of PMMA.