FocusAsia acetone prices to rise on feedstock costs, tight supply

11 March 2011 04:33  [Source: ICIS news]

By Felicia Loo and Yeow Pei Lin

Acetone is used to make PMMA, which goes into the making of flat screen televisionsSINGAPORE (ICIS)--Acetone prices in Asia are expected to edge higher in the coming weeks amid rising feedstock costs and several plant turnarounds that will tighten spot supply availability, market players said on Friday.

However, bloated inventories in China will signal limited spot buying from the region’s top acetone importer and put a lid on overall price gains, sources said.

Spot acetone prices were assessed at $990-1,085/tonne (€723-792/tonne) CFR (cost & freight) China Main Port (CMP), according to ICIS data. The price range on a zero anti-dumping duty (ADD) basis, while subject to 5.5% import duty, was assessed at $1,030-1,050 CFR CMP.

“[Feedstock] propylene prices are too strong and this would support acetone prices,” said a market source.

“From April and May onwards, China will receive less US supply. So the inventory levels will be drawn down,” he added.

China remains awash in acetone supply, prompting domestic end-users to buy the product locally, traders said.

Inventories at eastern China ports were estimated to be at a record high of 110,000-120,000 tonnes, while some China-based traders were offloading cargoes at lower prices on inventory pressure and cash flow concerns.

Looking ahead, traders said stock levels are expected to fall.

China is expected to receive 50,000 tonnes of acetone imports this month, down from 83,000 tonnes imported for February as a result of plant turnarounds and lower deep-sea shipments.

The shipments included cargoes from the United States, Europe, South Korea, Japan, Taiwan and Thailand.

In addition, there was a shortage of cumene supply in the US because of the industry’s early-year turnaround schedule. As a result, several downstream phenol/acetone plants could not source for enough cumene to run at full rates.

“Deep-sea cargo availabilities will be limited in the coming weeks,” one trader said.

Meanwhile, spot acetone supplies were getting tighter in most parts of Asia because of several turnarounds, traders said.

Taiwan’s Formosa Chemicals & Fibre Corporation (FCFC) shut its phenol/acetone plant in Mailiao from 1 March for regular maintenance that will last until 12-13 April.

Thai PTT Phenol said it would skip spot acetone exports in March because it is retaining supplies to feed its new 150,000 tonne/year bisphenol A (BPA) plant at Map Ta Phut in Rayong province.

PTT Phenol plans to shut its phenol/acetone facility at Map Ta Phut for a brief turnaround during 5-8 April. The plant can produce 200,000 tonnes/year of phenol and 124,000 tonnes/year of acetone.

Japan’s Mitsui Chemicals plans to shut its phenol/acetone plant in Chiba for a turnaround from 14 April to 28 April.

Taiwan Prosperity Chemical Corp (TPCC) plans to take its phenol/acetone plant in Kaohsiung off line for a few days in the second half of March because of an expected cut in power supply during that period.

South Korea’s Kumho P&B Chemicals is not offering spot acetone cargoes following a brief plant outage late last month that translated to a production loss of above 1,000 tonnes of acetone.

Separately, lofty global crude futures have driven up benzene values and tighter supply on the back of a peak cracker maintenance season that has bolstered propylene prices to above $1,500/tonne CFR NE Asia, ICIS data showed.

Downstream end-user demand is also expected to support acetone prices. Most methyl methacrylate (MMA) producers might lift prices in April, as flat-screen television manufacturers increase production.

Demand from this sector has been driving up demand for MMA and its downstream polymethyl methacrylate (PMMA) over the past years. PMMA has strong applications in the light guided panels of flat-screen televisions that use the latest light emitting diode (LED) technology.

“It’s true that (acetone) inventories in China are still very high at this point, but the situation will change as outside China, supplies are very tight,” one trader said.

Additional reporting by Peh Soo Hwee, Junie Lin and Liu Xin

($1 = €0.73)

For more on phenol and acetone, visit ICIS chemical intelligence
Please visit the complete ICIS plants and projects database
Read John Richardson and Malini Hariharan’s blog –
Asian Chemical Connections

By: Felicia Loo

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