US February truck acetone set for increases on tight supply

07 February 2013 17:53  [Source: ICIS news]

HOUSTON (ICIS)--US February truck acetone prices are expected to increase on continued tight supply, sources said on Thursday.

Producers and distributors have nominated increases of 5-6 cents/lb ($110-132/tonne) for February, and buyers expect those to find traction.

“We suspect these will stick because of propylene,” a distributor said. “We are starting to see it pick up in several areas.”

This would put February truck acetone contracts at 78-83 cents/lb DEL trucks (delivered via trucks) on a pre-discount basis.

January contracts were assessed by ICIS at 73-77 cents/lb DEL trucks on a pre-discount basis.

In addition to feedstock refinery-grade propylene (RGP) spot prices increasing 10.25-14.75 cents/lb in the past four weeks, acetone supply is tight.

“Everyone and their brother is looking for acetone,” a trader said. “It’s pushing up prices.”

Acetone supply remains tight because operating rates are low, owing mostly to weak demand for acetone co-product phenol.

However, with upstream benzene prices holding steady, sources said phenol demand could improve in the coming months and lead to more acetone on the market.

Most sources are expecting that this could take several months, so truck acetone prices are likely to remain firm.

“Prices will inch up a bit in the coming months,” another distributor said. “And it looks as though propylene is going to stay structurally short for a while.”

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

($1 = €0.74)

By: John Dietrich

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