FocusUS spot acetone higher than phenol for first time since 2009

20 March 2013 21:13  [Source: ICIS news]

US spot acetone higher than phenol for first time since 2009By John Dietrich

HOUSTON (ICIS)--US spot acetone prices moved above spot phenol prices for the first time since 2009, sources said on Wednesday.

The chemicals are co-products; phenol is made at a roughly 2-to-1 ratio to acetone. Phenol prices are typically higher than acetone, because of stronger downstream demand for phenol-based products.

US spot acetone bid/offer levels were heard at 63-66 cents/lb ($1,389-1,455/tonne, €1,083-1,134/tonne) on an FOB (free on board) basis.

US spot phenol was heard slightly lower at 62-64 cents/lb FOB based on two trades into India.

“Phenol and acetone are starting the year poorly,” a producer said. “It’s not sensible to sell material into Asia or anywhere else.”

This is the first time spot acetone has been assessed higher than spot phenol since 5 June 2009.

The ICIS average spot acetone price was 37.5 cents/lb, while the ICIS average spot phenol price was 36.5 cents/lb.

“Whichever one is higher is still on a case-by-case basis,” a trader said. “No one is willing to take the export price.”

Much of the reason for the poor demand for phenol stems from increased capacity in Asia leading to less ability for US producers to export material.

With the export market largely closed, US producers have turned down operating rates into the low-70% level, sources said.

The lack of export demand has dropped phenol’s premium over feedstock benzene – which hit a record high in 2013 – to 3-5 cents/lb.

“The low premiums could persist until May if this lacklustre demand continues,” the trader said. “The markets in China remain uncompetitive.”

The lowering of phenol production has severely tightened acetone supply, especially in the face of strong demand from the methyl methacrylate (MMA) market.

This has pushed US buyers to soak up almost all the material being produced domestically, leaving almost nothing for export.

“Acetone spot prices are above phenol spot prices, and this is not a good thing,” the producer said.

Several US buyers said that although overseas prices are lower, it remains too big a risk that prices in the US will fall while orders are being shipped.

The optimism for a fall in acetone comes from declining prices in the upstream refinery-grade propylene (RPG) market.

Major US phenol-acetone producers include Axiall, Dow Chemical, Haverhill Chemical, Honeywell, INEOS Phenol, SABIC Innovative Plastics and Shell Chemical.

($1 = €0.78)


By: John Dietrich
713-525-2600



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