09 August 2013 09:29 [Source: ICB]
The European August acetone methyl methacrylate (MMA) contract price has increased by €38/tonne ($51/tonne) on the back of an increase in the feedstock propylene contract price, sources confirmed on 1 August.
The August acetone MMA contract price settled at €908/tonne FD (free delivered) NWE (northwest Europe). In relation to the settlement, a producer said: "Prices should not be less than the propylene increase. Demand in Europe is picking up, and product is really, really tight." A major consumer said it did not see the market as tight as producers.
Acetone producers had been seeking an increase of €50/tonne from July to August, based on tight supply as well as high feed costs, while buyers would have preferred an increase of €25/tonne.
On 31 July a second major consumer had confirmed agreement of the European propylene contract price for August at €1,090/tonne, thereby establishing it as the new reference benchmark.
The €50/tonne increase over July was because of a firmer upstream market, while supply and demand fundamentals are stable.
The contract, which was agreed on a free delivered (FD) northwest European (NWE) basis, was settled initially between another major consumer and a major supplier.
A second major supplier later followed with this major consumer. A third major producer has also confirmed settlement.
A major buyer described the propylene increase as "too big". However, propylene producers had originally been seeking increases of up to €100/tonne from July to August.
Acetone supply has been restricted since the middle of July 2012 owing to cuts in primary product phenol. For every tonne of phenol made, 0.62 tonnes of acetone is produced as a by-product. The phenol cuts are on a global scale, and as a result acetone is tight not only in Europe, but also in the US and Asia.
Because of this, sources in the European market are expecting spot prices to firm in the coming weeks.
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