FocusMixed picture for Europe Q1 acetone

08 January 2008 14:41  [Source: ICIS news]

By Carl Roache

 

LONDON (ICIS news)--Opinion was mixed regarding the future direction of the European acetone market in the first quarter, with talk of firming prices countered by expectations of weaker numbers and an oversupply of material.

 

Certain European producers were in an aggressive mood for several reasons including the €57/tonne ($84/tonne) first-quarter rise in upstream propylene.

 

“We feel rather bullish on the acetone side,” explained one European producer. “I am targeting propylene plus on spot.”

 

As a justification, the producer talked of significant market strength underpinned by steady demand in Europe and Asia.

 

The ongoing force majeure at INEOS Phenol in Antwerp was also considered a supporting factor.

 

 “There is nothing to justify why the acetone prices are as low as they are,” added the source.

 

European acetone spot prices are currently at at €695-735/tonne free delivered (FD) northwest Europe (NWE), according to global market intelligence service ICIS pricing.

 

The producer said prices above €750/tonne FD in parts of northern Europe were now being targeted.

 

Despite the problems at INEOS Phenol, acetone spot prices were largely stable during the fourth quarter of 2007.

 

The declaration, which is set to be lifted any day, had been in effect since the end of October.

 

In spite of the 70% allocations in place, most buyers and traders reported sufficient acetone availability in the market generally.

 

This is evidenced by the lack of notable movement on spot prices.

 

At the start of October, before the force majeure announcement, acetone spot prices were assessed €5/tonne higher than they are currently, at €700-740/tonne FD NWE. Thus, rather than firm due to the supply constraints, prices actually softened slightly.

 

Meanwhile, several buyers gave a bearish outlook for the market.

 

One purchaser said sufficient product had always been available during the force majeure period and when the additional European capacity came fully on stream, there would be an excess of acetone.

 

“I think it will be oversupplied, right now it is balanced and this will change,” added the source.

 

The buyer said that as a result of this, spot numbers would fall.

 

Other buyers said improving supply would not be a major factor as Europe was already oversupplied and therefore most spare capacity would likely head to Asia.

 

Mixed views were evident in the trader/distribution sector also, with some sources saying spot numbers had already weakened, while others suggested the higher propylene price could possibly cause a firming of acetone spot prices.

 

First-quarter acetone methyl methacrylate (MMA) contract negotiations were just beginning for most, so targets were still being formulated and collated.

 

Acetone is used in the manufacture of MMA and bisphenol-A (BPA), which can both be used in the production of resins and plastics.

 

European acetone producers include Ertisa, INEOS Phenol, Novapex and Borealis.

 

($1 = €0.68)

By: Carl Roache
+44 20 8652 3214

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