FocusEurope acetone buyers frustrated with phenol operating cuts

21 September 2012 17:06  [Source: ICIS news]

LONDON (ICIS)--European acetone buyers on Friday said they are frustrated with having to pay high prices because of cutbacks in phenol operating rates.

Acetone, which is mainly used in the manufacture of  methyl methacrylate (MMA) and bisphenol A (BPA), is a co-product of phenol. Phenol operating rates have fallen since the second quarter, largely because of a fall in demand for BPA into the polycarbonate (PC) market, which has in turn cut the availability of acetone and raised its price in the market.

Phenol productions rates in Europe are currently quoted at around 80%, and in some instances even lower.

Acetone is currently valued at €950/tonne ($1,234/tonne) FD (free delivered) NWE (northwest Europe), €100/tonne higher than four weeks ago.

However, acetone buyers have argued demand is too poor for sellers to request such high prices.

In the distribution market, a normally active buyer and seller of acetone, said: “Why are we paying higher prices when our demand is lousy? I can’t ever recall September being so quiet.”

A second distributor said: “The energy has gone out of the acetone market and our sales look mediocre for September. Traditional customers are buying but I would really like them to take more.”

Regarding spot sales for this week, a trader said demand had been slow. “It’s been extremely boring in the afternoons this week. We’ve only sold a couple of trucks. There are still some enquiries in the market, but I think everybody is waiting for the October propylene contract to settle,” the trader said.

A major acetone buyer for MMA production said its demand was “crumbling” and it could get all the acetone it needed.

Another European acetone buyer said: “The market is becoming very complicated and I am worried about acetone spot prices. PC [demand] is not doing well, BPA and phenol are not good markets at the moment, so acetone prices should be less.”

The buyer, consuming for the MMA and solvent markets, said it had cut its acetone volumes by 20% because it was struggling to sell. It pointed out that MMA demand into the polymethyl methacrylate (PMMA) chain and PC was currently poor.

“MMA makes PMMA, and PC is going into the same markets for the same applications. Margins are not good and we have [acetone] spot prices going up because the market is tight,” the buyer added.

European propylene contract partners are gearing up for the next round of discussions to decide on the October monthly contract price, but with volatility in the upstream market, a new value is proving difficult to predict.

"Another week, another surprise” a key producer said in reflection of the latest developments on the crude oil and naphtha markets.

($1 = €0.77)

By: Julia Meehan
+44 20 8652 3214

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