This weekend, the chemical industry was hit by news that a certain propylene plant had risen 5,000 yuan / ton in a single day. This situation is similar to the MMA market in early April 2018 when MMA had risen by 4000 yuan/ton daily.
Two years later, in early April 2020, the MMA market once again created a historic breakthrough. Unfortunately, this is a downward breakthrough. The low price has reached an unprecedented 6500 yuan / ton, which is almost 75% off two years ago. Anyone can’t buy a loss at this price, but the losing party is passed on to the production plant, creating the first continuous loss since the MMA plants were operated.
As we all know, the MMA market has been in the downward channel for the past two years. The black swan during the Spring Festival hit the MMA price all the way to 9,000. At that time, it was believed that this price was close to the lowest price in the past, and it was unlikely that it would go down again. Moreover, the price of raw material acetone has been going up and down for several rounds. In the case that MMA production lines is facing losses, the cost side should also be taken seriously. However, it turns out that the history is always similar, the MMA market is still not controlled by upstream materials, and the wheel of history is constantly moving forward. Starting in late March, most factories have reached the extreme limit of inventory pressure, and prices have accelerated to decline. Market prices around the world almost update historical lows daily.
After the Qingming Festival, the source of life for all chemical products-crude oil finally rebounded, driving the confidence of all chemical colleagues. Around April 8th, after the MMA downstream big order was settled, the bottoming market was formed and the mainstream market price quickly recovered to more than 7,000 yuan / ton. MMA finally ushered in the first rise in 2020.
At the beginning of this week, affected by the sharp increase in the price of propylene over the weekend, most of the downstream products were closed. The prices of propylene oxide, epichlorohydrin, butyl acrylate and other products all rose by more than a thousand yuan per ton. In contrast, the related products of the MMA industry chain, acrylonitrile and MMA, are more moderate. From the chart below, the price of MMA has also been quickly surpassed by other products. So can MMA replicate the market for other products that have risen sharply?
First of all, after experiencing a rebound in the MMA market last week, the short-term market has entered a wait-and-see phase. The mentality of factories and traders has diverged. At present, the domestic factory equipment is still in the state of operation. Although the load of the factory equipment has been reduced, the inventory pressure cannot be completely released. In late April, Zhejiang Petrochemical planned to put in a 90,000-ton / year plant. By the end of the year, the production process of Huayi and Qixiang Tengda’s new devices was approaching. These potential new production capacities have brought great challenges to the future sales of the existing domestic MMA factories. Therefore, even if the factory has lost money in a comprehensive manner, stable delivery in the short term and stable customer relations are still the primary considerations of the factory.
Looking at the demand side, from the medium- and long-term perspective, although the horn of resuming production has been sounded for a long time, when it has been transmitted to the end market, the only obvious repair is the large consumer market which is closer to people’s livelihood. Industries such as decoration, real estate, and automobiles that match the MMA terminal market have not improved significantly, and industry consumption has declined to various degrees year-on-year. The turning point of the peripheral epidemic situation is still unclear, and the export market has shrunk significantly, which means that 1/3 of the foreign trade orders in the plate, ACR and paint emulsion industries are basically missing. The overall downstream demand is not optimistic. In the short term, most of the downstream orders have been signed last week, and the demand is not much. At present, the downstream has moderated to accept the price bottoming out, but buyers are more cautious to buy at low prices. If prices increase rapidly at this time, there may be an embarrassing situation when there’s no demand.
In short, it is expected that this will be a bottom-out rebound. The price of the short-term MMA market is expected to moderately rise but won’t rise sharply. Perhaps in the future, raw material prices will become an important factor on MMA market.