US November truck acetone moves higher on tight supply

09 November 2012 22:09  [Source: ICIS news]

HOUSTON (ICIS)--US November truck acetone prices moved higher, sources confirmed, spurred by increased feedstock costs and tight supply.

US November truck acetone contract prices were assessed by ICIS at 63-67 cents/lb ($1,389-1,477/tonne, €1,083-1,152/tonne) DEL trucks (delivered via trucks) on a pre-discount basis.

October truck acetone contracts were assessed by ICIS at 58-62 cents/lb DEL trucks on a pre-discount basis.

Several distributors and producers nominated 5 cent/lb increases for November, and sources said these have largely found traction.

“The price increase is pretty solid,” a distributor said. “People are chasing after material.”

The distributor added that inventory levels have dropped for most market players, so year-end tax concerns are being pushed to late November or December.

“Everyone’s acetone inventories are so drawn down, they need to be drawn back up,” the distributor said.

Producers agreed, citing continued low operating rates and a lack of import material available as reasons for tight supply.

“The distributors are nervous,” a producer said. “They know they need material to cover their year-end needs.”

Operating rates are expected to hold steady or weaken, depending on how acetone co-product phenol demand remains domestically.

Export phenol demand has shrunk in November because key feedstock benzene is at record highs in the US. This is making US phenol extremely unattractive to overseas buyers.

As a result, operating rates could fall if domestic end users are unable or unwilling to absorb the higher phenol costs, shrinking acetone supply further.

Additionally, the key feedstock for acetone, US refinery-grade propylene (RGP), has seen spot prices increase by 7-8 cents/lb in the past four weeks.

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

($1 = €0.78)

By: John Dietrich

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