In each issue of FreeFlow magazine, our business leaders from around the world share their insights into the global methacrylates markets.

Here, Malcolm Kidd, EMEA Monomers Business Director, offers his latest views and analysis (as of May 2020).

COVID-19

Firstly, please let me take this opportunity to wish the very best to everyone and their families. I hope that you are safe and continue to be strong until we can all emerge from this challenging situation.

Demand disruption

The softer market that existed through Q4 2019 was soon to be swept up by the impact of the global pandemic, first in China, then Asia, and then following in Europe, Middle East, Africa and the Americas all a couple of months later.

2020 had actually started reasonably brightly in the EMEA region, with end of business year constraints and some softening of prices seemingly having had a positive effect on demand, and outlook for the year. Through February and March, the impact on demand of the response to combat COVID-19 started to become fully apparent; the closure of automotive production reduced demand for coatings products and PMMA for fittings and trims, construction projects did not cease “overnight” but there was a notable reduction in demand for artificial glazing, signage, sanitary-ware products and industrial coatings and adhesives.

Coatings for the DIY, or home markets continued to be reasonably strong (but have ultimately been limited by the capacity of retail outlets) and with many large retail outlets and buildings being closed to the public, owners have taken the opportunity to refurbish and decorate, resulting in good demand for flooring products and some architectural coatings.

It has also been a timely reminder of how important the chemical industry is for our society and the importance of the products and functionality that it enables; and this is very true for methacrylates. PMMA protection screens have become a commonplace feature in supermarkets and pharmacies around the world as well as being used in frontline medical facilities in some very innovative ways. It is also apparent that they are an integral component in allowing countries to relax their lockdown constraints in an effort to resume some semblance of normal life. And the thinking is that these screens may well prove to be a feature that is here to stay, as the benefits are obvious.

PMMA is also used to manufacture the cuvettes required for testing blood, which has become so important in the fight against the virus. MMA being used for resins for printing inks required on labelling of medical and food supplies and in adhesives for food packaging and labelling, and MAA being used for NBR latex gloves are just some other examples of methacrylate products being used in the “frontline”.

Pictured: In Spain, our customer, Plazit Polygal, has helped hospitals give safer medical attention to those in need by donating fifty sheets worth of clear acrylic to the production of protective boxes.

Overall however and despite these positives, there has been a significant impact on market demand. Although the market demand in March was close to what had been expected, a conservative estimate is that there will be a reduction of 10-20% in April and May. Hopefully after that, as countries in the EMEA region start to emerge from lockdown, the situation will gradually improve. It is highly probable that we will observe some pent-up (or delayed) demand, but such has the been the scale of the negative impact on consumers’ wealth that economists are indicating that global GDP will reduce by 3% in 2020 (a swing of 6%) and in Eurozone by more than 4.5% and hence it will take some time to recover to the previous level of demand. Time will tell.

Supply side being seriously tested

Pre-COVID-19, methacrylate manufacturers were already being faced by margin erosion due to the global supply/demand balance and the generally softer global economy. Manufacturers now have many added complications in the operation of their assets and in managing their supply chains.  Lucite International’s Cassel site has continued to operate safely and steadily throughout this period, following government guidelines on safe working practices on site, and with all staff for whom it is not essential to be at the factory working safely from home.

I would like to thank all of our suppliers and service providers for the tremendous support that we have received which has allowed us to continue to make available all that we require to operate safely and to provide our normal high level of service to our customers. Such has been the level of disruption that the ensuing volatility is providing a very challenging business environment on a number of different levels. Demand will recover over time, but the resilience of every asset on the supply side is being tested very hard now; on its business model and on its cost base, in a way that it has not been since the financial crisis of 2009. And the newer assets will not yet have had to endure such a stress test.

To finish, I would again like to re-iterate my best wishes to you on a personal level, but also to wish the best for your business. At Lucite International, we look forward to having the opportunity to see each other “face to face” before too long and to discuss how we can work with you to support you in the future.