FocusIndia acetone under pressure; massive imports to arrive in Aug

24 July 2013 07:51  [Source: ICIS news]

By Veena Pathare

India portSINGAPORE (ICIS)--India is expecting massive volumes of imported acetone in August that will likely weigh down on market prices of the material, industry sources said on Wednesday.

On 17 July, acetone prices were assessed unchanged week on week at $1,070-1,110/tonne (€813-844/tonne) CFR (cost and freight) India – the low end of the range represents prices of cargoes subject to additional anti-dumping duties (ADDs), while the high end represents ADD-exempt cargoes – according to ICIS data.

India has concluded multiple import deals over the past four to five weeks, with more than 10,000 tonnes of July cargoes and 8,800 tonnes of August cargoes booked.

These volumes, which are significantly higher than the country’s usual monthly acetone imports of 6,000-7,000 tonnes, are expected to arrive at the Indian shores next month, market sources said.

Storage availability in Kandla, a major port on the west coast of India, is becoming a problem with the massive imported cargoes coming in, market sources said.

“In the last few days, we have had a number of acetone buyers asking us to help arrange for storage at Kandla, because of bulk arrivals in August,” the importer said.

India is a major importer of acetone in Asia.

For the whole of Asia, tightening acetone supply, following recent production cuts and with impending turnarounds at other regional facilities, may prompt sellers to hike offers.

“There is definitely going to be resistance in India to [accept] higher acetone prices in August and September, because of excess supply,” a regional phenol and acetone-importer trader said.

Acetone is a by-product of phenol. Weak phenol demand across markets triggered the production cuts that consequently limited the availability of acetone in the region.

Buying ideas from Indian acetone importers for end-August and September shipments will be capped because of abundant inventory of imports, market sources said.

Moreover, domestic supply also got a boost as a major producer in the country has restarted operations at its phenol/acetone unit in early July, market sources said.

The plant, which can produce 40,000 tonnes/year of phenol and 24,640 tonnes/year of acetone, had been idle for months.

The domestic producer has begun offering July cargoes at a list price of Indian rupees (Rs) 76.00/kg EXW (ex-works), they said. It usually offers discounts ranging from Rs1.20/kg to as high as Rs6.00/kg on its list prices, according to market sources.

Meanwhile, downstream demand in India is currently weak on account of the ongoing monsoon season that began in June and will last through September.

“Slow demand and excess supply means that a lot of product will build up at Indian ports, and it will be difficult for market to accept higher prices,” an Indian importer said.

Ample availability of acetone in end-August at the Indian ports will weigh down on domestic prices, which are presently at rupees (Rs) 75.00-76.00/kg ex-tank Kandla, market sources said.

Acetone buyers in India may quote lower bids for imported acetone given the high inventory in the domestic market, they said.

India consumes about 120,000 tonnes of acetone each year, more than half of which is primarily imported from northeast and southeast Asia, while the rest is covered by domestic production.

Acetone is used as a solvent in the manufacture of pharmaceuticals and industrial coatings.

($1 = Rs59.64 / $1 = €0.76)

Read John Richardson and Malini Hariharan’s blog – Asian Chemical Connections

By: Veena Pathare
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