US acetone settlements for MMA producers facing scrutiny

28 April 2009 19:04  [Source: ICIS news]

HOUSTON (ICIS news)--The US barge methyl methacrylate (MMA) acetone April contract continued to be contested even after a third acetone buyer said on Tuesday that it settled for 30 cents/lb ($661/tonne, €509/tonne) with one of its suppliers.

Two initial large-buyer contracts for April barge MMA acetone were settled at 30 cents/lb last week, the players said. Not all contracts have been finalised.

March contracts are 28.5 cents/lb, according to data from global chemical market intelligence service ICIS pricing.

However, the initial 30 cent/lb settlement for April is being contested by other players, who said the settlements are too low considering supply and demand fundamentals and rising feedstock costs.

A buyer pointed out that acetone was selling for 80% of propylene costs in 2008, but is now around 120% of the propylene price.

Sellers countered with tight supply fundamentals. The overall industry operating rate remains below 60% due to weak co-product phenol demand, a seller added.

A supplier pointed out that market dynamics have changed due to Dow Chemical’s acquisition of Rohm and Haas. It is not yet clear how that will influence the way contract negotiations are undertaken, market players said.

US based Dow acquired specialty chemicals company Rohm and Haas for $19bn in April.

The deal included the purchase of Rohm and Haas’ 790m lb/year (358,000 tonne/year) MMA plant. Rohm and Haas has been a large-volume buyer of acetone in the US market.

Dow has sold acetone from its 400 m lbs/year Oyster Creek plant in Texas, but more than half of that is consumed internally, sources said.

The players involved in the particular large-buyer negotiations said it is still business as usual so far and contract terms have not changed.

($1 = €0.77)

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For more on acetone or MMA visit ICIS chemical intelligence
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By: Heather McGuire Doyle
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