US July barge acetone initially settles 0.5 cents/lb higher

10 July 2012 20:47  [Source: ICIS news]

HOUSTON (ICIS)--The US July barge acetone contract reached an initial settlement slightly higher month on month, sources said Tuesday.

A buyer confirmed it has settled one of its July contracts at 45 cents/lb ($992/tonne, €804/tonne), up from June’s full settlement of 44.5 cents/lb.

Attempts to reach the seller have been unsuccessful, but other market sources said they have heard confirmation of the initial settlement.

The agreement is earlier than normal, market sources said, and could lead to a split settlement.

“It is certainly out of the ordinary,” a source said. “There is always room for a split settlement.”

The US barge acetone contract price is negotiated between three large producers -- Georgia Gulf, INEOS Phenol and Shell Chemical -- and the three largest buyers -- Dow Chemical, Evonik and Lucite.

Typically, an initial settlement is not reached until the second half of the month. The buyer and producer who reached a settlement have not reached any others and are not expected to until the second half of July.

Sources said the slight increase for the settlement was driven by tightness of acetone supply, as operating rates are lower than normal.

“I don’t know if the early settlement is good or bad,” a market player said. “It might have moved higher or lower throughout the month.”

Buyers argued that the ratio between acetone and feedstock refinery-grade propylene (RGP) is skewed in the producers’ favor and should have led to a lower July settlement.

($1 = €0.81)

By: John Dietrich

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