US January barge acetone expected to surge on propylene

22 January 2013 17:46  [Source: ICIS news]

HOUSTON (ICIS)--The US January barge acetone contract is expected to settle at a substantial increase because of surging upstream costs and tight supply, sources said on Tuesday.

Producers were pegging an increase of 12-16 cents/lb ($265-353/tonne, €199-265/tonne), while some buyers and downstream players were expecting increases of 8-12 cents/lb.

December barge acetone contracts settled at a rollover at 53 cents/lb DEL (delivered) barges.

Producers emphasised that feedstock refinery-grade propylene (RGP) costs have increased by 14-19 cents/lb since the end of December.

“The January increase is going to be substantial, it’s going to be double digits,” a producer said. “It has to jump just 14 cents/lb to keep up with the propylene.”

The producer added that the US supply situation is the tightest of the major regions, owing mostly to low operating rates.

“It doesn’t make sense for the US to have the cheapest acetone and the least supply,” the producer said.

The operating rates in the US remain low because of weak demand for co-product phenol.

Acetone buyers said the US supply situation is not as severe as producers say, but added that increases are imminent for the January contract.

Market players in the downstream methyl methacrylate (MMA) market are expecting a big increase, owing mostly to propylene.

“With propylene contracts going up 15 cents/lb, you’ve got to assume acetone will follow in kind,” a source said.

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 = €0.75)

By: John Dietrich

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