European chemical profile: Acetone

13 September 2010 00:00  [Source: ICB]

USES
Acetone's principal use is in acetone cyanohydrin, the precursor to methyl methacrylate (MMA) and methacrylic acid. Nearly all MMA is polymerized to produce homo- and copolymers. The second largest use is in bisphenol-A (BPA).

Acetone is also used directly as a solvent and to make others such as methyl isobutyl ketone (MIBK) and methyl isobutyl carbinol. Other uses include higher molecular-weight glycols and alcohols, pharmaceuticals and antioxidants.

SUPPLY/DEMAND
Demand in Europe this year has improved significantly on 2009 for both MMA and BPA, with both sectors reported to be very strong. The solvents sector remains sluggish, with players still holding low inventories.

Supply issues at several plants from April to June have been resolved and normal output has resumed, pushing the European market into oversupply. Strong demand for coproduct phenol in Europe, as well as Asia, has caused a surplus of acetone and some producers were said to be considering reducing phenol production to help stem the glut.

Spanish producer CEPSA mothballed one of its three lines in Huelva in June. The 95,000 tonne/year line had been running at reduced rates since June 2008.

Netherlands-based LyondellBasell Industries has permanently closed its solvents operations in Berre, France, which included 75,000 tonnes/year of acetone capacity. It bought the Berre assets from Shell Chemicals in 2008.

PRICES
Europe's MMA sector moved to monthly acetone contracts in January 2009, following the switch from quarterly to monthly agreements in the upstream propylene market.

MMA acetone contracts had consistently risen since January 2010 before falling in July and August. Contracts slipped again in September by €17/tonne ($22/tonne) to €785/tonne (gross), reflecting both the €10/tonne drop in propylene costs and acetone's long supply position.

Spot levels had slipped to €670-730/tonne at the start of September, after hitting highs of over €1,000/tonne in May and June as production problems and a lack of imports combined with strong demand to force prices up.

Margins for phenol-acetone have improved in 2010, but still need boosting, say producers, particularly as acetone continually fails to contribute. "Acetone has made money in just one month this year - May," says one producer.

TECHNOLOGY
Nearly 90% of acetone is produced via the cumene route, where acetone is coproduced with phenol. The isopropyl alcohol (IPA) route, where the alcohol is dehydrogenated to acetone over a catalyst, has been declining.

Shell Chemicals developed a phenol ­process that coproduces acetone and methyl ethyl ketone (MEK). The process has the ­potential to change the acetone/MEK ratio within ­reasonable limits to meet varying ­market ­demands.

OUTLOOK
The major challenge for the industry is the rising surplus of acetone. Michael Foeste, phenol product manager at Germany-based trader Mitsui & Co. Deutschland has predicted that there could be as much as a 200,000 tonne/year surplus by 2015, owing to differences in global demand between phenol and acetone.

Two possibilities to counteract the surplus include converting acetone to IPA and recycling acetone back to propylene, although the latter option is said to be expensive.

IPA is seen as a growth area led by demand in Asia for semiconductors. Foeste expects growth of 5-6%/year for IPA globally until 2015.

No new investment is expected in Europe, with the focus on Asia and the Middle East.

Global growth is put at 4%/year at most, and only 0-2%/year in Europe to 2015.

Profile last published november 26, 2007

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