Europe spot acetone prices stabilise, market balances out

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

Europe spot acetone reaches balance pointLONDON (ICIS)--European acetone spot prices have stabilised as the market reaches a balanced position following cutbacks in phenol production, market sources said on Friday.

Following the recent sharp drop in acetone spot prices, which reflected the decrease in the July propylene contract price, any thoughts of further acetone spot price erosion during the second half of July evaporated this week.

Across the spot market, acetone business conducted for this week was in a €740-800/tonne ($902-976/tonne) FD (free delivered) NWE (northwest Europe) price range, unchanged from the previous week.

“Acetone is not breaking the €700/tonne mark as some people thought, but there are some buyers testing the market claiming they can by at €650-680/tonne on an FCA [free carrier] basis. In the past, these customers never came back - but they did, which tells me they [the buyers] are just testing the market,” a trader said.

The trader added that the buyers did come back to do business at €740/tonne on a free delivered basis, which was a “rollover” for the seller from the previous week.

Another active trader said its prices were also unchanged from the previous week.

“I don’t know anybody who is long on acetone at this moment. Some producers are pretty balanced-to-short and phenol production has been reduced,” the trader said.

In order to help balance the European market, major producers have also moved large volumes to Asia in order to prevent a build in Europe.  

Firming prices in Asia have also created some arbitrage opportunities. Spot business was recorded in Asia for July loading deep-sea cargoes at $960/tonne CFR (cost and freight) China this week.

Although prices were stable, demand was not so exciting for most re-sellers.

“The market is clearly in summer mood and our demand this week has been lousy. I think everybody bought their July volumes last week,” said one.

A second re-seller to the solvents market echoed this, also describing its demand as “lousy” but confirming that the market was “more or less stable”.

Both re-sellers quoted spot acetone in a €750-780/tonne FD NWE price range.

Looking ahead for the second half of the month and August, buyers and sellers were not expecting much change to their price or demand.

“Due to phenol production being reduced from European producers I am sure acetone will be short, not in July or August but in September,” said another re-seller source. 

“There will be demand in September as production [in the end-user markets] resumes and if [phenol] production is not so high the market won’t be slow anymore,” he concluded.

As well as cutbacks in phenol production, various outages are planned during the summer months. These include Poland’s PKN Orlen at Plock, Poland, Domo Caproleuna in Leuna, Germany and France’s Novapex in Roussillon.

A three week turnaround is also scheduled at the Borealis plant in Porvoo, Finland, in September, according to market sources.

($1 = €0.82)

By: Julia Meehan
+44 20 8652 3214

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