Europe spot acetone deals above €1,000/t as supply tightens

25 March 2011 10:58  [Source: ICIS news]

LONDON (ICIS)--European acetone spot deals have been agreed above €1,000/tonne ($1,408/tonne) as supply continues to tighten because of production restraints, market sources said on Friday.

“Acetone is very tight and product has been imbalanced since the beginning of the month. The minimum price for this week is €970/tonne free delivered, but I tested the market and sold some trucks above €1,000/tonne,” said one Europe producer.

The producer also pointed to the closure of Slovnaft’s 40,000 tonnes/year of phenol and 25,000 tonnes/year of acetone in Bratislava from 30 June this year. Official confirmation was not available from the company.

“We are receiving enquiries from eastern European countries we’ve never heard from because of the Slovnaft shutdown,” said one producer. “Hungary, Bulgaria and Slovakia,” he added.

Producers based in the south and north of Europe also said they were getting calls from interested buyers of acetone based in the east of Europe.

Also, adding to the tight feel in the spot acetone market was Cepsa Quimica’s planned outage in Huelva, Spain.

INEOS Phenol also announced to its phenol and acetone customers that it will be reducing its output by 10% in April owing to problems with the supply of cumene, a company source said.

Another producer source described the European acetone market as “more than tight”. The source felt the supply situation had worsened as their competitors built stocks ahead of planned spring and summer outages.

Polimeri Europa will have a planned shutdown at its Mantova facility in Italy from early June to early July. The plant has the capacity to produce 300,000 tonnes/year of phenol and 185,000 tonnes/year of acetone.

Domo Caproleuna will carry out a turnaround at its plant in Leuna, Germany, in the second half of May to the first half of June. The plant has the capacity to produce 150,000 tonnes/year of phenol and 90,000 tonnes/year of acetone.

Novapex will have a planned shutdown at its Roussillon facility in France in August. The company has the capacity to produce 175,000 tonnes/year of phenol and 108,000 tonnes/year of acetone at Roussillon.

Other sellers of acetone confirmed that spot business had been concluded at higher levels this week.

A trader said it had sold to the solvents market above €1,000/tonne.

“With one customer we offered 200 tonnes at €1,040/tonne. They went away and then came back and asked to reserve this price.”

However, the trader said the market has felt quieter this week in terms of demand but that this is typical in the final days of the month.

The trader valued spot acetone this week at €950/tonne on the low end and €1,010-1,020/tonne on the high end.

Strong demand was also supporting the upward momentum, according to producers. The view from downstream derivative markets, however, was not so exciting.

Sources in the methyl methacrylate (MMA) and bisphenol A (BPA) sectors described business as expected and on target. Despite reports of market tightness, none of the major acetone consumers expressed concern regarding supply. 

One major buyer described the European acetone market as “balanced with risk”.

Although demand was viewed as healthy in the MMA and BPA markets for contract volumes, buyers of acetone for both sectors did not feel the tightness that their suppliers were claiming.

“We can get all we need. My feeling is that the market is made tight by the production. If you have a shutdown you will build your stocks,” the major buyer concluded.

The last time acetone was above €1,000/tonne was in May 2010, when almost every European producer was undergoing planned or unplanned maintenance, a similar scenario that can be seen in the current market.

The March acetone MMA contract price settled at €967/tonne FD NWE up €64/tonne from February, because of the increase in the March propylene contract price.

($1 = €0.71)

For more on acetone visit ICIS chemical intelligence
Please visit the acetone ICIS plants and projects database

By: Julia Meehan
+44 20 8652 3214

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