28 March 2009 16:00 [Source: ICIS news]
HOUSTON (ICIS news)--Concerns over feedstock costs and the impact of weak phenol demand will be a major topic for discussion among acetone players who on Saturday begin to converge on San Antonio, Texas, ahead of the National Petrochemical and Refiners Association (NPRA) 2009 International Petrochemical Conference.
The industry-wide March acetone methyl methacrylate (MMA) contract price discussions remain at a deadlock, with some of the producers refusing to accept the recent initial settlements.
Two major acetone buyers have now settled their March contracts for 28.5 cents/lb ($628/tonne) with two different suppliers, the players confirmed.
The settlement puts the March contract in the same range of the Februry price which is 28-30 cents/lb, according to global chemical market intelligence service ICIS pricing.
The initial settlements for March have not become industry-wide yet, as some of the major parties remain in negotiation.
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Sellers have been pushing for increases due to higher propylene costs and tight supply.
But increases in feedstock prices have arrived at a time when the value of MMA is under intense pressure from the downturn in the automotive and construction industries.
Developments in the propylene market have become a big factor in the monthly acetone negotiations. However, supply and demand dynamics also play an integral role.
“Acetone prices in 2009 will be greatly influenced by supply,” an acetone seller said. “Granted, acetone demand is down by 20-30%, but operating rates are down more than 50% due to the weak phenol market. There is still a supply issue for the acetone players.”
Phenol is a co-product of acetone production.
US phenol/acetone producers have been operating at reduced rates due to low co-product phenol demand. Market players estimate the overall operating rate in the
Operating rates at Asian producers are around 60-80%, an importer said. Sellers are targeting a $20-30/tonne price hike for April shipments amid firming upstream values and comfortable inventory levels.
Nevertheless, acetone buyers in all three regions anticipate limited price upside for acetone given the lukewarm downstream demand.
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