Europe spot acetone prices stabilise, but market remains uneasy

15 March 2012 12:38  [Source: ICIS news]

LONDON (ICIS)--The European spot acetone market was a little more settled this week, in terms of pricing and availability, although an air of caution remains, market participants said on Thursday.

“The market has arranged itself with the current [tight supply] situation, and prices have not increased any further,” one trader said.

The trader valued spot acetone within a price range of €1,150–1,250/tonne ($1,494–1,623/tonne) FD (free delivered) NWE (northwest Europe).

Since the beginning of 2012, spot acetone prices have increased by 80% because of availability problems.

A European producer that is “sold out” for the rest of March said the tight supply situation was 80% down to a lack of availability and 20% down to demand.

“On [acetone byproduct] phenol, everything is running in a normal way – there is nothing new to say. But for acetone, we have placed everything. We are completely sold out, and don’t have a drop in storage,” the producer said.

“What we are selling in March, we are making today ... We are short, short, short. It’s a supply scenario, and what we are facing is 80% linked to supply.”

Although spot prices appear to have settled for the time being, the market remains cautious, with producers and consumers keen to know the status of Spanish producer CEPSA Quimica’s planned outage in Huelva, as well as France-based Novapex’s force majeure at Roussillon.

In addition, the success of Germany-based INEOS Phenol’s four-week planned turnaround in Gladbeck, scheduled to start in April, is also the focus of attention for many market followers.

Some suggest that the acetone market will remain tight until June, but others believe it will move to a more balanced position sooner than that.

“I think the peak in demand and price will come in April because the [INEOS] shutdown is well-planned. However, high MMA [methyl methacrylate] demand might make it tough,” said an acetone buyer.

Major MMA producer Evonik, based in Germany, will be entering into a planned outage at Worms, which coincides with the Gladbeck turnaround, according to market followers of acetone and MMA (which is produced using acetone).

Meanwhile, Novapex remains in force majeure on acetone and phenol out of Roussillon.

CEPSA Quimica has “slowly” restarted line No 2,  and expects to restart line No 3 early next week.

The current planned and unplanned production concerns in Europe come just ahead of the peak season for MMA and MMA derivatives.

One MMA maker said demand was already starting to increase because of the warmer temperatures across much of the continent.

Despite the positive undertones for the acetone market and major derivatives MMA and bisphenol A (BPA), as well as solvents, the question lingers of how long current spot prices can be sustained.

“People are afraid that they will not be able to find any material, but my concern is everything can collapse if one vessel arrives in Europe. The problem is they [exporters of Asian material] should have shipped a month ago for it to arrive today,” said one producer.

A second producer said: “We are steaming ahead, and spot lots are at €1,250–1,300/tonne. It’s crazy.”

Because prices are so high, the producer was worried that it could start to create “demand destruction”: “People [downstream] will simply stop producing. The market needs to judge where the top is.”

For every 1 tonne of phenol made, 0.62 tonnes of byproduct acetone is produced.

($1 = €0.77)

By: Julia Meehan
+44 20 8652 3214

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