Supply chain challenges

During March and April this year, LI undertook the largest ever overhaul event to happen at its Cassel Site. This placed a significant challenge on many areas of the business; both in the EMEA region and within MCC globally. The first thing I would therefore like to do is to thank our customers and logistics services providers for working with us in the months preceding the event, as well as during it, to minimise the impact and maintain a stable supply. I’m pleased to say that the Cassel site has been back on line now for several months and is operating well.  The benefits from the work done during the outage are now being realised.

During the first part of this year, the operation of MCC’s new JV MMA & pMMA assets in Saudi Arabia have been fully established and the MMA from the Alpha II operation (SAMAC) has been integrated into our EMEA supply chains, providing an increased level of robustness to the supply capability.

Global MMA supply capability

Global availability of MMA was limited at times during 2017 as the production side suffered unplanned outages. The nameplate capacity of MMA globally has been boosted in the last year however by new assets coming on line in both China and Saudi Arabia. Thus far this year, it can be seen that this new capacity has helped to compensate somewhat for the maintenance events that had already been scheduled, plus some further unplanned outages that have reduced production output from the existing asset base.

The consequence is that, in general, supply has balanced demand – at a global level at least. Although periodically each region has had its own “local” supply side dynamics and issues to contend with and respond to.

Influences on demand

Global demand for MMA continues to grow at a rate of +2-3% per annum and is estimated to be in excess of 3.7mmtes in 2018.

Demand year to date in each region has been influenced not only by the prevailing conditions of the major economies there, but also by some very specific issues relating to legislation and trade policy. To provide a greater insight into some of these regional issues, we heard from our colleagues in MCC’s MMA Business Domain in Asia and the Americas (see below).

As for the EMEA region thus far in 2018, MMA demand has been good but has been impacted by the general lower level of confidence within the Eurozone. In addition, there have been instances of de-stocking within some industry segments which has sporadically impacted the demand profile in the first half of the year.

As per the other regions, the outlook for MMA demand growth is positive and there continues to be new and imaginative uses for methacrylates and their derivatives.

Can you describe how 2018 has been to date in terms of demand?

There has been strong demand for applications such as PMMA/MS (Light Guide Panels),T-ABS and emulsions with 5% growth anticipated for Asia for the year. In India however, we are seeing double digit growth, primarily for the emulsions.

How has capacity developed in the region during this year?

Two local producers started their MMA/MAA operations in China using C4 technology, adding capacity of 50kte per annum per company, but this growth has been offset by the ban on imports of scrap & RMMA production by the Chinese government which will have an impact of up to 200KT/Y.

We are also not seeing any capacity expansion in South East Asia, so the overall position for the region will remain tight to balanced for 2018.

What impact do you expect production shutdowns in Asia to have this year?

There are several shutdowns planned in Q4 in Asia. Although most suppliers are building up the inventory and getting ready for the shutdown, there will still be a need for a large level of imports to meet the total demand and fewer exports.

What is the biggest factor currently impacting the Asian MMA market?

Trade tension between the US and China is weakening demand but this will be compensated for by South East Asian manufacturers. We foresee the demand for emulsions remaining strong, especially in China (where the government is trying to control the VOC emissions) and in India (where the construction per capita is still small).

What are the key things to look out for?

In China it’s about local producers (including new projects coming on line); new regulation from the government and RMMA (depolymerised MMA, sometimes known as DMMA). We have MMA capacity expansion under evaluation but it is unclear whether they will be realised.

In terms of applications, the focus is on Light Guide Panels (LGP): It is said that TV producers will continue to use PMMA/MS for LGP in years to come.

How is the new MAA asset of MCC (TMMA) performing and what is the outlook for MAA?

Both the MAA and nBMA new lines are running very well. Demand growth for MAA is steady and positive with strong demand for NBR-latex. Prior to MCC’s expansion we weren’t able to meet all customers’ requirements. We are trying to remedy this as quickly as possible in all regions of the world.

Can you describe how 2018 has been to date in terms of supply and demand?

The Americas regional supply landscape has shifted in 2018. All domestic producers have continually produced at full capacity with some market demand still remaining unfulfi lled. MCC’s global network is bridging much of the supply gap.

The on-going tightness of MMA in your region is well publicised, when do you think customers can expect any change?

The Americas region will continue to import MMA until the completion and start-up of MCC’s third Alpha MMA asset in the US. MCC is focused on providing continual, consistent supply to the Americas Region to ensure the supply necessary to support customer growth.

What are the key factors driving the high demand and how likely are they to continue?

We are seeing increasing MMA demand across all segments in the Americas with the most vigorous rise in consumption coming from the architectural coatings / interior decorative paint segment. Annual growth rates of 5.5-6.0% have been confirmed by large coatings producers which is driving MMA demand. The expectation is for healthy MMA growth to continue for the next 5-6 years driven by the coatings segment.

Architectural coatings growth is driven by the favourable attributes of acrylic formulations such as durability, colour enhancement, and ease of cleaning. Regulatory changes that limit and / or prohibit volatile organic compounds (VOCs) in paint are also playing a role in MMA growth. Acrylic formulations help coatings producers achieve low or no VOCs in their product.

What are LI doing to help support customers through this tight period?

As a global supplier, LI / MCC are coordinating a global asset sourcing plan to help bridge much of the supply gap in the Americas Region. The second Alpha plant in Saudi Arabia began full production in early 2018 and is running well. Alpha II is helping to provide some much needed support to the global market that was not present in 2017 prior to the commissioning of the plant.

What investments are being made to help supply become more sustainable?

For MMA, MCC is evaluating investment in the Americas region with the third Alpha project expected to be complete by early 2023. Like the Saudi Arabian plant, this third Alpha plant would also produce 250kte per annum.

What is the outlook for MAA?

MAA supply / demand is in short supply with demand for concrete additives, food packaging and specialty chemicals driving growth. Most of the regional capacity is soldout in the region. LI / MCC are expanding capacity in the Asia region and considering an MAA expansion at Beaumont to address demand growth.