September truck acetone contracts tighten by 2 cents/lb

14 September 2012 22:50  [Source: ICIS news]

HOUSTON (ICIS)--US September truck acetone contracts tightened after producers saw mixed results with their earlier initiatives, sources said on Friday.

US September truck acetone contract prices were assessed by ICIS at 62-68 cents/lb ($1,367-1,499/tonne, €1,052-1,154/tonne) DEL trucks (delivered via trucks) on a pre-discount basis.

August prices were assessed at 60-70 cents/lb DEL trucks, as producers attempted to push through a 5 cent/lb increase in the early and middle stages of the month.

“The implantation of the August price increase was very spotty,” a producer said. “It was very regional.”

Other sources agreed, citing the midwest as the region where business is being done mostly at the low end of the range.

“For some reason the midwest has been the toughest region this year,” another producer said. “There’s a lot of material stored there, more than the demand would warrant.”

Sources added that the West coast region has also seen a strong amount of competition, while prices in the US Gulf and northeast regions are higher.

“There are some outliers, but most business is being done at the mid-point or below,” a producer said. “Demand has started to taper in September.”

Most distributors agreed that demand has been steady in August and September, but are expecting inventory concerns from downstream buyers.

Truck acetone supply has improved slightly from levels in June and July, as operating rates have been ticking upward.

Distributors also said that weak demand and low prices in Asia have pushed US acetone producers to focus on domestic markets, rather than export sales.

However, operating rates are still lower-than-normal and with several acetone plants already down for or scheduled to receive maintenance in September, supply could tighten quickly.

Even if supply tightens, sources said, it would be difficult for producers to move prices higher with the traditional inventory destocking that occurs in the fourth quarter.

Further putting downward pressure on acetone prices at the end of the year is expected softness in the feedstock refinery-grade propylene (RGP) market.

Spot RGP prices have been below the 40 cent/lb level since the start of June, tracking weak demand and high inventories.

Major US acetone producers include Georgia Gulf, Haverhill Chemical, Honeywell, INEOS Phenol and Shell Chemical.

Truck acetone is used to help make epoxy resins, polycarbonate and numerous solvents, including nail polish removers.

($1 = €0.77)


By: John Dietrich
713-525-2600



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