Important information regarding the acrylic market

There are extraordinary market conditions that are adversely affecting the market for plastics and associated commodities.

Methyl Methacrylate (MMA) is used in the production of Polymethyl Methacrylate (PMMA), which is clear, impact modified material used in a wide variety of applications including the production of number plates. The current situation is that global demand for MMA has exceeded supply for several months and this has had an adverse affect on the production of PMMA and as a consequence there is a significant imbalance between the supply and demand for PMMA products. Unfortunately Europe has been the hardest hit with current estimates being that only 60% of current and scheduled demand is being met. As a result prices have become highly volatile with many users having confirmed forward orders cancelled by suppliers who are simply unable to meet demand. There is expectation that contract pricing will become a thing of the past as early as the first quarter of 2011 being replaced by spot pricing.

There are several factors, which have combined to create this extraordinary situation. In late 2008 and early 2009, manufacturers of MMA experienced a slump in demand as the global recession hit. Many of these manufacturers took capacity off line and others scheduled major maintenance operations closing off production in some cases for several months. It seems that manufactures were taken by surprise when there was an unexpected resurgence in demand. At the same time demand in Asia, and in particular China, increased dramatically as manufacturers of LED and Plasma TV’s were forced to use acrylic instead of styrene.