OUTLOOK ’12: Asia acetone trade flow to shift on new capacities

06 January 2012 03:00  [Source: ICIS news]

Acetone is used to make PMMA, which goes into the production of flat screen televisions.By Liu Xin

SINGAPORE (ICIS)--Asian acetone trade flow is set to shift, with imports of deep-sea cargoes expected to drop in 2012, in line with new capacities that are scheduled to come on stream in China, market sources said.

China has been the largest acetone importer in the region, with high growth rates of 30-50% seen in 2009 and 2010, respectively.

China’s import volumes fell in the first half of 2011 because of tight regional supply following maintenance shutdowns at northeast Asian facilities and production disruptions in Japan in the aftermath of the deadly 11 March earthquake and tsunami. The tight supply situation was made worse by a shortage of deep-sea cargoes amid a severe feedstock cumene shortage.

Despite that, a buying spree has been ongoing since the third quarter of 2011, with over 10,000 tonnes cargoes changing hands every week, following an ease in tight supply and stable demand from the downstream solvent sector.

According to statistics from China Customs, acetone imports into the country stood at 653,639 tonnes from January to November 2011, with average monthly imports at close to 60,000 tonnes.

In recent years, the Asia-Pacific region, especially Taiwan, South Korea and Japan, has consistently been the key source of acetone supply to China’s import market.

Thailand is gradually replacing Japan and South Korea as the second-largest exporter because cargoes of Thai-origin enjoy competitive advantages, such as exemption from anti-dumping and import duties.

However, with the start-up at Thailand’s PTT Phenol’s downstream 150,000 tonne/year bisphenol A (BPA) facility and increased captive demand, Thai imports fell substantially in 2011.

“Imports from Thailand will drop further in 2012 because of the impending start-up at [PTT Phenol’s] downstream methyl methacrylate (MMA) unit,” a northeast Asian trader said.

“We probably will see a drop in imports from the US and Europe as well, given the planned new capacities in China,” the trader added.

Deep-sea cargoes from the US and Europe that face no trade barriers, such as anti-dumping duties, accounted for close to 43% of total imports into China in 2011, according to the China Customs data.

Phenol-acetone makers in the US and Europe have long been facing an excess in local acetone supply because of the relatively robust demand for phenol.

China, with its apparent consumption maintaining solid average growth rates at levels above 15%, has been the major outlet of this excess acetone.

“We have seen steady growth in acetone production in China from 2006 to 2011,” said a China-based trader, who added that the capacity growth rate in China was at above 12%.

The recent expansion in the domestic acetone capacity in China helped boost the country’s self-sufficiency rate to around 43% in 2011, while its local production is expected to increase by 10% to 614,000 tonnes in 2012.

Imports into the country are expected to account for around 54% of total supply in 2012, according to ICIS China’s estimates.

“Deep-sea cargoes, which are exempted from anti-dumping duties into China, still enjoy competitive advantages,” a regional trader said.  

“However, deep-sea suppliers will face increasing difficulty in diverting cargoes to Asia, particularly China, given the increase in China’s local supply,” the regional trader added.

For more on acetone, bisphenol A and phenol, visit ICIS chemical intelligence
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Read John Richardson and Malini Hariharan’s blog – Asian Chemical Connections

By: Liu Xin
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