Europe acetone spot prices firm on phenol cutbacks - traders

17 August 2012 10:20  [Source: ICIS news]

LONDON (ICIS)--European acetone spot prices continue to rise because of a drop in phenol production, acetone resellers said on Friday.

Sources in the acetone spot market said phenol operating rates in Europe were as low as 50%, although this was not directly confirmed by European producers.

Acetone is a by-product of phenol. For every tonne of phenol made, around 0.62 tonnes of acetone is produced.

“Phenol production is around 50% for some producers and the highest is max 65%. This is the reason why acetone is so short,” a trader said in relation to spot acetone prices.

“There are not so many people around at the moment but €865/tonne ($1,068/tonne) FD [free delivered] is my lowest [spot] price,” the trader added.

Another trader said its lowest price on a CPT (carriage paid to) basis was €850/tonne. The trader was interested to see what will happen to spot acetone prices if demand starts to improve in the coming weeks.

Although spot acetone prices have increased by nearly 14% over the past four weeks, sources agreed demand is far from booming.

According to an acetone distributor to the solvents market, demand was “awful”, although it was expecting to move its spot price up next week because of cutbacks in phenol production.

The market is also eyeing price developments upstream in the propylene market, where another increase for September is already being talked about.

The August propylene contract price increased by €120/tonne to settle at €1,055/tonne FD NWE (northwest Europe).

Resellers said that if propylene firms again and phenol operating rates remain low, acetone spot prices look set to firm even further.

For one reseller there was no doubt the acetone price would continue to move up.

“The time for flexibility is over because margins have been really squeezed. It will be a case of pay the price or we won’t trade,” the trader said.

Meanwhile, for the second half of August, another reseller said that despite its demand being “very, very quiet”, its primary supplier was asking for €880-920/tonne on a DDP (delivered duty paid) basis.

($1 = €0.81)

By: Julia Meehan
+44 20 8652 3214

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