Japanese material giant announces: production capacity halved! Stop external sales!

On June 27th, Coca Cola Company announced a significant adjustment in its production capacity of methacrylic acid business.
According to the new plan, the company will reduce its current MMA (methyl methacrylate) annual production capacity by half, from 67000 tons to 33500 tons. In addition, Cola Li has decided to stop selling MMA externally and focus on internal use. At the same time, the company will also reduce the production of downstream products and by-products such as methacrylic resin molding materials and ammonium sulfate to adapt to changes.
It is reported that this plan is tentatively scheduled to be implemented from July 2025.

Excess warning!?
Coca Cola Company has clearly stated that the main reason for initiating the production reduction plan is due to the persistent oversupply. To clarify whether there is an excess of MMA, we can look at it from the following points:
(1) In terms of supply and demand
According to incomplete statistics, as of the first quarter of 2024, the planned production capacity of MMA worldwide exceeded 7.5 million tons, and the actual production capacity also exceeded 5.5 million tons.
In terms of consumption, taking China as an example, the apparent consumption in 2022 was about 1.12 million tons, while it increased to about 1.2 million tons in 2023. Considering that China accounts for approximately 30% of the global MMA market demand, it can be estimated that the annual total consumption of the global MMA market in the past two years may be below 4 million tons if the consumption demand in other regions has not decreased due to the macroeconomic environment.

                                               Monthly Data of China's MMA Apparent Consumption
However, in this situation, Mitsubishi Chemical, the world's largest producer of MMA, is still actively expanding its production capacity, with a total planned production capacity of nearly 1.5 million tons. In addition to Mitsubishi Chemical, Rom Chemical, and domestic Xinjiang Zhongyou Puhui, two companies have also planned a new production capacity of nearly one million tons. Behind this, the iteration and development of new production processes may be a key factor driving the expansion of these companies.
At present, most of the preparation routes for increasing production capacity have abandoned the current mainstream process, which is also the ACH method used by Coca Cola, and have chosen the C2 and C1 routes. The new process avoids the use of highly toxic hydrogen cyanide and corrosive concentrated sulfuric acid in the production process, and instead utilizes raw materials such as ethylene and coal based methanol, which not only improves safety but also helps to reduce production costs and equipment maintenance costs.
(2) In terms of operating rate
According to the S&P Global Chemical Economics Handbook, it is expected that by 2027, China and the United States will become the main drivers of global MMA capacity growth. In the past year or so, the overall capacity utilization rate of MMA in the Chinese market has dropped to below 60%.

(3) Downstream competitor substitution
From the perspective of downstream consumption structure, over 60% of MMA downstream demand is concentrated in PMMA (acrylic), while other key downstream products involve surface coatings, plastic processing aids, and other aspects.
And PMMA faces substitution competition with other materials in the resin product market. In 2023, the apparent consumption of PMMA in China reached 389200 tons, a decrease of 15% compared to the previous year. The main reason for the decrease in demand is that ordinary PMMA products face fierce challenges in the market competition with alternative materials such as PS (polystyrene) and PC (polycarbonate).
So, planning and developing other competitive MMA downstream products has also become a focus of attention for industry leaders.
In March, Wanhua Chemical's annual production of 50000 tons of MS resin project was announced. MS resin is copolymerized with MMA and SM (styrene), and its transmittance is between PMMA and PS, with both performance advantages. These characteristics make MS resin regarded as a substitute for transparent PC and other materials.
Extended Reading: Wanhua Chemical's "Stuck Neck" New Material Project Publicity

Based on the above information, it can be seen that there is indeed a phenomenon of oversupply in the global MMA industry. In the future, with the iteration of production processes and the different economic development of downstream industries, some production enterprises may be gradually phased out.
It is worth mentioning that globally, even if the current situation is maintained, the MMA production capacity of Coca Cola Li is quite limited, and this business is not its core strategic layout. On the other hand, in another field - high resistance thermal insulation plastic resin EVOH, as the world's largest supplier of this material, Keli Li is constantly gathering enterprise resources, expanding capacity, building factories, and consolidating its leading position.
On March 27th, Coca Cola announced a $410 million expansion plan for EVOH resin production.