09 September 2011 11:07 [Source: ICIS news]
By Julia Meehan
LONDON (ICIS)--European acetone spot prices drifted lower this week with many market participants on Friday blaming a tip in the supply/demand balance as well as concerns over an economic slowdown.
While some sellers said their demand was steady and "as expected" for September, others spoke about a much slower-than-expected start to September.
In terms of pricing, spot numbers have been on a gradual decline since peaking in April this year at €1,100-1,185/tonne FD (free delivered) NWE (northwest Europe).
During this time, spot business hit a record high of €1,400/tonne ($1,944/tonne) into Italy. However, this week prices dropped to the mid-to-low €700s/tonne in parts of northwest Europe.
But in the trade and distribution sector, a reseller said levels of €750-780/tonne FD NWE, were “old numbers” and that in order to move any cargoes now he would have to offer at a lower level.
Another Netherlands-based reseller said that to move any material it would have to buy at €680-690/tonne on a free carrier alongside (FCA) basis.
Sources were unclear why prices have come down by so much and at such a pace. However, in terms of demand, buyers for the MMA market sounded a little downbeat.
One MMA producer said that it was trying to “control [acetone] inventory levels” by as much as possible.
“It’s a weak period and we want to control our inventories levels as much as we can. Many products are under pressure. It’s more about macro-economics rather than specific events,” he added.
A second major consumer of acetone also said it was lowering its inventories.
“We have really reduced our volumes because exports [of MMA] to the US are not good and demand is coming down there. We will also be going into an overhaul in October,” the major consumer said.
The buyer also felt that an element of de-stocking in Asia was also creating some weakness in the market.
Producers of acetone were not as downbeat about their demand, although many accepted that spot prices were under pressure.
In relation to the lower spot prices, a European producer said: “I don’t know what the story is... demand is okay and there are no nasty surprises.”
“The acetone market doesn’t follow normal conventions and seem to be driven by the fragmented nature of the solvents market. It all feels wrong,” he added.
There are reports that producers are again exporting large volumes of acetone to Asia to prevent a build up of material in Europe.
“Producers are feeling a little strange and are saying that the will simply not sell at these numbers and they are just getting it (acetone) out of Europe. But there is a lot of interest from China and other parts of Asia for European acetone,” said a distributing source.
Spot prices in Asia moved up again this week by $20/tonne, to levels of around $1,170-1,180/tonne CFR China Main Port.
($1 = €0.72)
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