European PMMA Prices Rise Amid Double Whammy of High Feedstock Cost and Short Supply

Hamburg (Germany): Despite persistent demand challenges, prices of Polymethyl Methacrylate (PMMA) have remained firm across the European market throughout March 2024. High energy and feedstock prices, coupled with tightening supply conditions, have been the main drivers behind the request for price hikes, despite demand remaining under severe pressure from economic challenges. Market players anticipate firmer expectations for the forthcoming month, indicating a mix of uncertain demand and cost-push factors.

As per ChemAnalyst latest database, PMMA prices have showcased an increment of USD 32/MT across the German market. The feedstock Methyl Methacrylate (MMA) has been observed on the higher end due to tight supply, leading to high domestic production costs of PMMA within the domestic market. On the other hand, global crude oil prices have surged due to tighter global supply resulting from escalating conflicts in the Middle East and between Russia and Ukraine. Meanwhile, a shrinking U.S. rig count has added to upward price pressure. The strong crude oil prices have further supported an uptrend in domestic market prices.

Furthermore, market players report that PMMA production has been impacted by a rail strike in Germany and tension regarding commercial ships, significantly disrupting domestic supply of PMMA and raw materials originating from East Suez. Additionally, many tankers have been compelled to take the longer and more costly route via the Cape of Good Hope or seek other alternative options, thereby contributing to supply shortages as facilities operate at reduced capacities. This exerts supply-side pressure on the market fundamentals of PMMA, leading to bullish market sentiments OF PMMA among the manufacturers. On the macroeconomic front, German manufacturing activity remained in the contraction zone, below 50, due to a significant deterioration in new orders and output.

However, demand for PMMA from the downstream automotive and construction industry has remained average in the domestic market amid unfavourable economic conditions. According to the German Federal Land Transport Administration (KBA), new passenger car registrations in March totalled 263,844 units, down 6.2% from the same month last year. Consequently, foreseeing limited inventories and strong production costs, manufacturers have raised their PMMA offers to gain profitability. As a ripple effect, prices of PMMA FD Hamburg were settled at USD 3188/MT during March 2024.

Looking ahead, ChemAnalyst predicts that European PMMA prices are likely to increase due to further anticipation of a rise in feedstock MMA prices. Furthermore, oil prices are projected to reach USD 100/barrel this year, fuelled by escalating tension between Israel and Iran over the OPEC producer's support for Hamas in Gaza and stronger-than-expected demand data. However, demand for PMMA from the downstream automotive and construction industry might remain bleak until April 2024.