05 July 2013 09:40 [Source: ICIS news]
By Julia Meehan
LONDON (ICIS)--European acetone is easy to come by for buyers looking to secure one or two trucks, but sourcing larger volumes is difficult, market participants said on Friday.
“Business is flat and I don’t want to make excuses about the summer holiday, but the market feels like it is getting weaker and weaker.
“But there is a lack of barges and shipment material. If you are looking for volume you won’t find it at all. You see maybe €840/tonne [$1,091/tonne] offered, but we can’t work with this. It’s just not workable,” said a German trader.
The trader believed that “price-wise” the market had bottomed out and quoted €850/tonne as its lowest free delivered (FD) price this week.
Because acetone prices in the US are more expensive than Europe and the gap between Europe and Asia is also closing, it seems that numbers of acetone participants have been looking at alternative outlets other than the European market.
Another, trader with storage in the Amsterdam-Rotterdam-Antwerp (ARA) region was also looking for larger volumes of acetone to move to the US.
“I don't know what is going on – you can’t buy a shipment for love nor money. People aren't banging our door down, but there are not loads of it [acetone] around.”
The trader also said that Europe producers were “not interested” in selling or dropping their prices.
“They [the producers] said €850/tonne FCA is their best price. I have a tank and it’s empty – I can’t buy at a price that I am not prepared to pay,” the trader concluded.
Because of ongoing cuts in phenol production globally, as well as little change in the price of raw materials, sources in the acetone solvents market are concerned that following the summer holiday period, any surge in demand could result in a sharp spike in the price of spot acetone.
Indeed, indications are that phenol rates may be reduced again because demand for phenol derivatives, particularly bisphenol A (BPA) remains so low.
Nylon intermediates and phenolic resins demand, while picking up in the past few months, is still at a very low level.
For every tonne of phenol produced, 0.62 tonnes of by-product acetone is made.
Another trader source said: “Demand is not so bad but it’s quiet - I would say acetone is around €850-900/tonne for this week. Producers don’t have much because phenol is so bad.
“People are telling me acetone is limited, but I can get my hands on a cargo, just not a workable price."
Most producers describe their stocks positions as sold-out and one major producer is pushing for higher prices.
“On acetone, we are trying to move prices up. In the truck and rail market, we are also going to start pushing prices up because the market is over corrected,” said one producer.
A second said: “Acetone demand is stable on the low side and price is not the issue. Lowering acetone prices will not have a positive impact on acetone demand.
“People are looking to move volume to the US. It's difficult - we are still short on acetone and it is not long in Europe.
Although the majority of traders are struggling to find larger volumes of acetone at lower prices, one trader said it could secure a “bigger lot” below €800/tonne FCA (free carrier alongside).
“€850-900/tonne FD - I don't see that - absolutely not. I had discussions with two producers and one said they would definitely sell below €800/tonne.
“The arb to the US is not that far open,” the trader said.
Truck prices for June in the US moved up by 5 cents/lb to 69-73 cents/lb.
($1 = €0.77)
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