Europe acetone spot prices fall for first time since early Sept

12 October 2012 13:53  [Source: ICIS news]

Price fallLONDON (ICIS)--European acetone spot prices have eased for the first time since early September because of a slight dip in demand, sources confirmed on Friday.

Most prices recorded this week were in the low €900s/tonne FD (free delivered) NWE (northwest Europe), down from the mid-€900s/tonne.

“Acetone is now on the low side of €900/tonne and it’s not really related to availability, it’s because there is not so much demand,” said a European trader.

In terms of demand from the methyl methacrylate (MMA) sector, the trader said its draw from contract customers was “pretty good”.

“There has been no big reduction in demand from the MMA market, but they were already running with low stocks. BPA [bisphenol A] is still not that good and an integrated [BPA] producer is having serious problems."

Indeed, major BPA producer Momentive has declared force majeure on its 100,000 tonne/year liquid epoxy resins (LER) plant at Pernis in the Netherlands following a small explosion. Momentive expects the plant to be down for at least seven days.

The European Petrochemical Association (EPCA) meeting held this week in Budapest, Hungary, also took a number of normally active players away from the physical market, which created a quieter feel, according to sources.

“It’s been a quiet week because most people were at EPCA. I booked hardly any material and saw very few orders. It was a very quiet and calm week,” said a supplier to the Amsterdam-Rotterdam-Antwerp (ARA) region.

The supplier quoted €900-920/tonne on an FD basis, but even at this level it was “not easy” to sell much volume.

As is typical for the time of year, an element of destocking is starting to take place, and this often creates some downward price pressure in the market.

However, that pressure is not thought to be so severely felt because strict inventory management has been a theme through the phenol and acetone chains this year.

In light of this, most sources in the acetone market expect prices to remain relatively stable though October and into November, unless there is a major shift in feedstock propylene prices.

“I think there will be some softening at the end of the month, but rates have been low for everybody this year so we won’t see a dramatic impact on price,” said a producer.

Another producer said it had seen no change in terms of its demand or pricing so far this month.

Most acetone sources felt some weakness, but none expected to see the market crashing.

Although demand has tailed off, the acetone market is not awash with volume, and a number of suppliers described their acetone inventories as tight because of cuts in phenol production.

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

“I am seeing lower numbers in Germany as traders try to destock, but we are short and all our quantities are sold in our portfolio. OK, demand is not so brilliant, but we won’t see it collapse,” said a third producer.

Towards year-end, an element of destocking typically takes place as buyers and sellers concentrate on reducing working capital.

A trader that sold at €920/tonne ($1,195/tonne) FD this week, €10-20/tonne below its selling price last week, felt that the downward pressure was coming from traders needing to move volume to free up storage and avoid sitting on expensive material.

“It’s all about money in the bank and not product in the tank,” said the trader.

($1 = €0.77)




By: Julia Meehan
+44 20 8652 3214

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