Methyl Methacrylate Prices Show Bullishness in the US Market Amid Short Supply

Texas, (US):  The Methyl Methacrylate (MMA) market opened June on a firm footing across the US, with supply constraints coming to the fore and mitigating the impact of weak raw material prices in the regional market. Additionally, demand for MMA from the downstream derivative industry has also improved, which lifted the prices of MMA. On the macroeconomic front, annual inflation in the US slowed to 3.3% in May 2024, down from 3.4% in April but still above the Federal Reserve's target of 2%.

Prices of MMA have increased by USD 32/MT in the US market. However, feedstock Acetone prices have declined, easing the overall production cost of MMA in the domestic market. Nonetheless, this was insufficient to drive the price realization of MMA at the lower end. On the other hand, domestic demand for MMA from the downstream Polymethyl Methacrylate (PMMA) industry has increased as consumption from the automotive sector has improved, leading to an upward shift in the price realization of MMA. According to market sources, US new vehicle sales reached 1,444,543 units in May, representing an 8.8% increase from April and a 5.0% increase from May 2023, with gains primarily from domestic sales as sales of overseas vehicles softened. Thus, prices of MMA FOB USGC were offered at USD 2465/MT during the week ending June 7, 2024.

Furthermore, a major producer of downstream PMMA, Rohm, significantly expanded its production capacity at the Wallingford plant in Connecticut (USA) in June 2024 to strengthen its market position for specialty PMMA molding compounds. This innovative improvement was made possible by modifying and redeploying an existing production line at the Wallingford site, providing customers with faster delivery and meeting increasing global demand. Consequently, demand for MMA has also increased, as MMA is the major raw material for PMMA.

On the other hand, inflationary pressures that have kept borrowing costs elevated have not prevented US consumers from spending. The US Federal Reserve has signalled it will not lower its target lending rate from a 23-year high until policymakers are more confident that inflation is slowing at a sustainable pace. Nevertheless, a contraction in manufacturing activity in May and indications of weaker hiring growth have heightened the odds the Fed will begin cutting its target rate later in 2024.

Additionally, manufacturing firms were not fully operating at full capacity in the wake of global uncertainties. As a result, material availability was limited to meet downstream demand, further escalating MMA prices in the domestic market. Furthermore, several market participants speculate that the upcoming hurricane season and other weather disruptions might impede production and logistics activities, likely exacerbating the short supply situation of MMA in the domestic market.

Looking ahead, ChemAnalyst expects that MMA prices are likely to remain high in the US market due to rising demand from the downstream derivative industry. Furthermore, the supply of MMA might stay tight due to low production across the market.