Some US acetone contracts switch to monthly

24 June 2008 18:14  [Source: ICIS news]

By Heather McGuire Doyle

HOUSTON (ICIS news)--Two US acetone sellers and one buyer will begin to settle large-buyer contracts on a monthly basis, moving away from traditional quarterly settlements, amid growing volatility in feedstock prices, parties involved in the settlement said on Tuesday

“In conjunction with our suppliers, we intend to establish a monthly based large buyer acetone marker price,” a major purchaser said. “This acetone marker will replace the quarterly large buyer (MMA) settlement price currently used to price our acetone purchases.”

The acetone barge price is negotiated with methyl methacrylate (MMA) producers in the US. The major acetone buyers are Lucite, Evonik and Rohm and Haas.

Major sellers include Sunoco, Shell, Georgia Gulf, INEOS and Dow Chemical.

“The quarterly negotiations drag on for far too long, often settling after the quarter ends,” a seller said. “Feedstocks are too erratic to continue to do business this way.”

Second quarter negotiations have just initially settled with one buyer and two large sellers at plus 6 cents/lb ($132/tonne, €84/tonne), but a full industry wide settlement has not been completed.

If the industry settles second-quarter barge MMA acetone contracts at plus 6 cents/lb, the price would be 53.5 cents/lb, according to data from global chemical market intelligence service ICIS pricing.

“In the current energy and feedstock environment our business can no longer withstand the risk associated with not having a timely settlement,” a large buyer said.

The two sellers involved in the monthly contracts will nominate by the fifth business day of the month of delivery and discussions will be concluded on or before the last business day of the delivery month, the large buyer said.

It remained unclear if the rest of the market will follow suit and move to monthly contracts.

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By: Heather McGuire Doyle
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