Europe spot acetone firms on tight supply

27 June 2008 23:59  [Source: ICIS news]

LONDON (ICIS new)--Acetone spot prices have firmed by €30/tonne ($48/tonne) as a result of a tight market, sources confirmed on Friday.

“Since last week we have not done any business below €730/tonne and have sold in to some regions at €750-760/tonne,” said a producer. “We have gained volume because some people can’t get enough material from west European producers,” the seller added.

The producer valued the spot range in Europe at €720-750/tonne FD (free delivered) NWE (northwest Europe) but stressed that from 1 July it would target €800/tonne.

The €800/tonne target for solvent/spot acetone was heard across the acetone market. However, some in the trade and distribution sectors said that such as rapid €100/tonne increase would be impossible to pass on downstream.

“The spot price has already increased this week and we will not agree to €800/tonne but I see the necessity to do something,” an active trader commented. “People cannot afford to pay more from one day to the next”.

Spot acetone prices have remained flat in Europe for the past six months as the market lengthened resulting from new capacities coming on-stream because of healthy demand for phenolic derivatives.

Acetone is a by-product of phenol. For every tonne of phenol, approximately 0.60 tonnes of acetone is produced.

A weaker than expected polycarbonate market, a derivative of bis-phenol A (BPA) and a main driver for phenol demand, has put producers under considerable price pressure on acetone.

In recent weeks, European phenol and acetone producers have been running at reduced rates owing to a lack of export opportunities and strikes in Spain and France which in turn has resulted in a tighter market.

Despite the tight situation traders said that demand was still quiet.

“People are shocked about the increases because demand is so quiet,” commented a trader. “This is a push on cost and not demand,” he added.

Acetone producers accepted that demand was not booming and some confirmed that downstream business was slow.

“We have hit rock bottom on acetone and sooner or later there is no point producing,” said a European producer. “Keep your eye on propylene because this might not been the end of the road,” concluded the producer. 

($1 = €0.63)

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By: Julia Meehan
+44 20 8652 3214

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