US November barge acetone fully settles 9.3% higher

21 November 2012 17:05  [Source: ICIS news]

US November barge acetone fully settles 9.3% higherHOUSTON (ICIS)--The US November barge acetone contract reached a full settlement 9.3% higher, sources confirmed on Wednesday.

Buyers and sellers confirmed reaching a November settlement at 53 cents/lb ($1,168/tonne, €911/tonne) on a DEL barges (delivered via barges) basis.

The contract gained 4.5 cents/lb from October’s settlement of 48.5 cents/lb.

Reaction to the settlement was mixed from market players.

One producer said it left some money on the table but felt the settlement was moving the market in the correct direction.

“It was a catch-up from previous months in regards to propylene,” the producer said. “You had costs go up 12 cents/lb since August, which means acetone should be 9 cents/lb higher.”

Since August, the US barge acetone contract has gained 7.5 cents/lb.

Another producer said the November settlement continued to push the ratio of barge acetone prices to propylene prices lower.

“November was the third month in a row the ratio and margins have declined,” the producer said. “There is now unquestionable tightness in the market.”

The producer estimated that ratios between acetone and propylene have fallen by 14% since August.

One of the buyers argued that this movement is appropriate, saying the current ratio remains well above historical levels.

The buyer added that downstream demand in the methyl methacrylate (MMA) market is poor.

Sources agreed supply is tight because operating rates are low and could move lower because record-high benzene will likely weaken demand for acetone co-product phenol.

The lower operating rates would make barge acetone tight and could severely hamper activity in the export and truck acetone markets.

The US barge acetone contract is negotiated between three large producers – Georgia Gulf, INEOS Phenol and Shell Chemical – and the three largest buyers – Dow Chemical, Evonik and Lucite.

($1 = €0.78)

By: John Dietrich

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