The MMA market experienced two waves of price fluctuations in July. Supply and demand dominated the market trend during the month, with the cost side having a significantly stronger impact on the market in the mid-to-late July than in early July. Therefore, under the combined influence of cost support and the failure to realize expected supply increases, MMA prices began to rise from mid-last week. Due to crude oil volatility, market sentiment was unstable. Entering this week, the MMA market was mainly wait-and-see at the beginning of the week, with overall limited fluctuations. As of July 27, the reference price for MMA in the East China market was 10,500-10,650 yuan/ton, lower than the 10,800-10,900 yuan/ton at the beginning of July.
I. Cost increase helped push up the market center, which then fell into wait-and-see mode
As shown in Figures 1 and 2, in the early July market, supply and demand dominated the market trend. Costs were lower than in the mid-to-late month, leading to a weak price trend. Downstream buying power was clearly insufficient, and the negotiation center shifted downward. As of July 8, the mainstream negotiated price in the East China market was 9,900 yuan/ton, down 1,150 yuan/ton from the end of June, a decline of 10.41%.
As shown in Figure 2, the costs of both processes increased significantly in mid-to-late July. As of the morning of July 27, compared with before the rise on July 9, the costs of MMA (ACH method) and MMA (C4 method) increased by 6.18% and 19.20% respectively. In addition, the increase in MMA supply in early and mid-July did not materialize as expected, and actual supply was lower than expected. Therefore, the MMA price trend was stronger than in early July, and the actual price trend was higher than industry insiders had expected at the beginning of the month.
II. MMA supply increase lower than expected, capacity utilization gradually rising
As mentioned earlier, the supply increase in mid-to-late July fell short of expectations. As shown in Figure 3, according to Chempricehub data monitoring, as of July 23, the MMA capacity utilization rate was 59%, lower than the forecast of 62% on July 16 for July 23 shown in Figure 4. It is preliminarily estimated that if there are no unplanned factors this week, the capacity utilization rate will be 59%, still lower than the forecast of 63% on July 16 for July 30. It can be seen that, based on the dynamic statistics of inspection units on July 16, the estimated MMA capacity utilization rate was higher than the actual value. At the same time, some cargo shipments were delayed in arrival. These two factors had a certain impact on the market trend.
III. Cost side still provides support, short-term market to operate strongly
In the short term, cost support still exists, and sellers have limited willingness to negotiate concessions, while downstream purchasing sentiment tends to be cautious. If cost changes are limited, under the game between cost and supply-demand, the market is likely to consolidate in a narrow range. Short-term crude oil fluctuations affect market sentiment, and cost changes along with the pace of seller shipments influence the market trend. Continue to monitor bid and offer dynamics.
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