Asian MA softens on thin buying interest, potentially longer supply

Asian import offers for maleic anhydride (MA) are down as sellers sought to generate buying interest.

However, trade remains muted and if supply lengthens in coming weeks, upon completion of plant turnarounds in Taiwan and South Korea, this could weigh in further on MA demand, market participants said.

This week, offers for late August shipment supplies surfaced at at least $20/tonne lower than last August trades. But even at these lower asking levels, “buyers are not responding”, a seller conceded.

Before this, average prices for MA had held steady at $960/tonne CFR (cost and freight) southeast Asia for three weeks in a row.

The gloom and doom in regional economies is a major reason why MA buyers are shying away from the spot market, market players said.

MA is used for the production of unsaturated polyester resins (UPR) which has heavy applications in automobiles and construction sectors.

But operations at UPR factories have slowed down across the region, market sources said, in part due to poor uptake from the automotive industry, where car sales in key markets like India and China have declined throughout the year.

Average UPR operating rates in China, for instance, have languished under 40% for many months.

As a result, “I am still sitting on high inventories since nothing much has flowed to my customers”, a MA buyer said, and this leaves him with neither room nor interest to take in additional MA volumes for now.

“There is no rush either to buy”, another end-user said, as “prices may soften further once more spot supplies emerge”, possibly by end August, when various plant turnarounds in the region are completed.

These include the 60,000 tonne/year Nan Ya Plastics line in Taiwan which is expected to start up by this weekend, as well as the 38,000 tonne/year Yongsan Chemicals line in South Korea which will return on stream by late August.

By then, the 35,000 tonne/year unit in Taiwan operated by Tasco Chemical will also be ready to commence spot business, market sources said.

This plant, which was shut after a fire hit the compound earlier this year, restarted in mid-July but held back spot transactions then to focus first on clearing back-log of contractual obligations and rebuild inventories.