Price and market trends: US October truck acetone prices soften

08 November 2013 10:00  [Source: ICB]

Weaker benzene feedstock values and the need to trim stocks weighs on acetone prices. Phenol exports to Asia are thin

US truck acetone contract prices slipped by an average of 3 cents/lb ($66/tonne, €48/tonne) for October, potentially reaching a floor, some sources said on 28 October. The decline took the new range to 71-74 cents/lb, as assessed by ICIS.

“Truck values have certainly slipped as many scramble to compete for market share,” a trader said, suggesting that the low end of the current range could be the pricing floor.

Another market source said that besides prices being driven partly by weaker October feedstock benzene values, “people are getting serious about meeting year-end inventory goals”.

The September truck acetone contract previously settled flat, while last month’s barge contract weakened by 1.25 cents/lb on some pressure from weaker refinery-grade propylene (RGP).

The large-buyer US October barge acetone contract fell by 1.75 cents/lb, taking the October barge price to 63.50 cents/lb ($1,400/tonne, €1,022/tonne). The US barge acetone contract is typically negotiated between three large producers – Georgia Gulf, INEOS Phenol and Shell – and the three largest buyers – Dow Chemical, Evonik and Lucite.

Broadly, the market continued balanced to snug, most sources said, with co-product phenol operating rates still at 65-70% on poor demand and practically no export market. Downstream, an indicator of the health of the US construction industry within the next 6-9 months increased again in September. The American Institute of Architects’ (AIA) Architectural Billings Index (ABI) increased to 54.3, up from 53.8 in August. Any ABI score above 50 indicates an increase in demand for architectural design services.

The US barge acetone contract is typically negotiated between three large producers – Axiall, INEOS Phenol and Shell – and the three largest buyers – Dow Chemical, Evonik and Lucite.

The US phenol contract range for October settled marginally down, sources confirmed on 28 October, in line with a weaker October benzene contract amid generally soft market conditions.

The 0.41 cent/lb decline took phenol to a new contract range of 81.18-85.63 cents/lb ($1,790-1,888/tonne, €1,289-1,359/tonne), as assessed by ICIS. Feedstock benzene slipped to $4.37/gal early in the month, pressuring the phenol contract downward.

US phenol operating rates were confirmed still in the 65-70% range, as exports were thin to non-existent to Asia, and domestic demand sectors, which include housing, continue to be seen stable to weaker as the year-end seasonal lull continues.

The benzene spot market appeared to have bottomed out as prices dropped to a 16-month low within the previous week, sources said, stemming from continued downward pressure attributed partly to weaker overseas markets, ample supply and lacklustre energy futures.

Feedstock US refinery-grade propylene (RGP) was higher late in the previous week on support from tight supply and the downstream plastics market, sources said.

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

By: Larry Terry
1 713 525 2653

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