Price and market trends: Europe acetone trucks easy to obtain but cargoes scarce

12 July 2013 09:28  [Source: ICB]

Market players are worried about a potential price spike for spot acetone following the summer holiday period

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 5 July.

"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.

BOTTOMED OUT
The trader believed that "price-wise" the market had bottomed out and quoted €850/tonne as its lowest free delivered (FD) price.

Because acetone prices in the US are more expensive than Europe and the gap between Europe and Asia is also closing, Europe acetone players have been looking at alternative outlets. 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 said.

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 acetone demand could result in a sharp price spike.

Indeed, indications are that phenol rates may be reduced again because demand for phenol derivatives, particularly bisphenol A (BPA) remains so low.

LOW-LEVEL DEMAND
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.


By: Julia Meehan
+44 20 8652 3214



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