Europe acetone to rise on tightness, propylene spike - sources

01 March 2011 12:56  [Source: ICIS news]

Europe acetone to rise on tightness, propylene spikeSINGAPORE (ICIS)--The cost of acetone in Europe is set to firm again because of tightness in supply and another increase in the cost of feedstock propylene, market sources said on Tuesday.

In relation to the "high" and "unexpected" €80/tonne ($111/tonne) increase in the March propylene contract price, a European producer described it as "a disaster for our customers”.

“This is a disaster for our customers. They are going to kill us. In just one or two hours the cost of propylene increased by €40/tonne. We were expecting it (the propylene contract) to increase by €20-40/tonne,” the producer said.

On the back of another hike in feedstock costs, the producer said its target for spot acetone was now in the low €900s/tonne for the solvents market and the high €900s/tonne for the pharmaceutical sector.

A second European producer said that it would be increasing the price of its acetone to the spot market by €100/tonne with immediate effect.

“The [acetone] market has finally got wind in its sales, so from us it will be propylene plus,” the producer said.

“What is interesting is that last year acetone didn’t make a single contribution to our bottom line, so let’s make hay while the sun shines?”

Tightness in the European market was also fuelling the intention of acetone producers to raise spot and contract prices in March.

A number of suppliers said they were totally sold out of material.

“We are in the same position as we were this time last year. April, May and June the market was tight. When I look at my demand in February, which was just 28 days, it was higher than the 31 days of January,” said a supplier.

“February looks like it’s the first month in six months that we didn’t lose money on acetone,” the supplier added.

A contributing factor to the tightness in the market is a planned turnaround at major producer CEPSA Quimica’s plant in Huelva, Spain, as well as cumene supply problems from the US to some European producers.

Acetone is a by-product of phenol. Approximately 0.62 tonnes of acetone is produced from one tonne of phenol. The major feedstock for phenol is cumene, which is produced via benzene and propylene.

While the March propylene contract increased by €80/tonne, the March benzene contact price rolled over at €1,001/tonne.

“At least a rollover on benzene gives us some compensation, but with the benzene contract price above €1,000/tonne, it is still very expensive,” said the second producer.

Buyers and re-sellers (distributors) are expected to react with dismay at another increase in the value of acetone, since passing through previous increases downstream in the solvents sector had proved tough.

($1 = €0.72)

For more on acetone visit ICIS chemical intelligence

By: Julia Meehan
+44 20 8652 3214

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