Europe acetone spot prices jump on short supply

24 January 2013 12:38  [Source: ICIS news]

LONDON (ICIS)--European acetone spot prices continue to move up on short supply caused by cut backs in primary product phenol, sources confirmed on Thursday.

While spot acetone prices have been holding in the low-to-mid €800s/tonne ($1,067/tonne) on a free delivered (FD) northwest Europe (NWE) basis for much of January, €900/tonne was a spot price frequently mentioned this week.

One trader described the increase in the value of spot acetone as “drastic”.

“There has been a drastic increase for FCA (free carrier) Rotterdam acetone, with offers at €850-860/tonne and this is what we are hearing from other traders. It’s not easy to get material and we are sold out for January. This price brings us to €900/tonne and above on a DDP (delivered duty paid) basis,” the trader said.

Another trader confirmed €850-900/tonne FD NWE as its range so far this week, although it confirmed it had lost some volume at €830-840/tonne FD NWE.

Although the trader lost some business, it also concluded a deal at a much higher level.

“I did €980/tonne with a customer who needed it urgently, but it also had a freight of €70-80/tonne. I anticipate that there will be no product available and I would assume by February 4th there will be nothing,” the trader added.

Producers of acetone continue to run phenol at reduced rates because of poor demand for major phenol derivative polycarbonate (PC).

A rollover for the first-quarter PC contract price is expected to do little to spur demand and increase PC operating rates since margins for PC producers are at such a low level.

“Margins are terrible,” said one major PC maker.

Another said: “The market is still very long. The problem is not with supply, but with poor demand and it's been the case since the summer of 2012. If producers cannot increase prices they will shut down sooner or later as this cannot be sustained forever.”

A major PC buyer said something very similar. “The market is very long now and if producers fail to increase prices they will have to shut down.”

Meanwhile, a major producer of phenol and acetone said that it did not have a “single kilo” of acetone to sell.

“Everybody in the world is totally unbalanced. Phenol players are running low and acetone pulling hard. The situation is critical, but I warned everybody about this three-to-four weeks ago.”

“To say it’s [acetone] tight is an understatement,” the producer added.

($1 = €0.75)

By: Julia Meehan
+44 20 8652 3214

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