Europe acetone market bewildered by spot price falls

08 November 2013 15:08  [Source: ICIS news]

LONDON (ICIS)--European spot acetone prices continue their sharp decline, despite the market remaining fundamentally tight because of ongoing production cuts in primary product phenol,  sources said on Friday.

In relation to the acetone spot market, a major producer said: “Acetone spot has decreased – €900-950/tonne ($1,216-1,284/tonne) – the spread is big.

“I think it has all to do with acetone that came into Europe, but if you go to European producers and suppliers, it’s more like €950/tonne.  There is not much material in the market.”

The majority of sources are perplexed by the ongoing and sharp decline in the value of spot acetone and why lower prices were seen in the market again this week because, fundamentally, stocks are low.

Spot values have fallen below €900/tonne ($1,216/tonne) for the first time since late August.

Prices quoted by European producers were in a €900-950/tonne FD (free delivered) NWE (northwest Europe) price range, but in the trade and distribution sectors acetone was valued below this range.

“In the south of Germany, we are losing orders. People are buying at €870/tonne FD,” said one reseller.

“I am asking who is offering this because the market is still not long. €820/tonne FCA (free carrier alongside) – this is too low. We will not follow. We are relaxed on volume,” the source added.

A second reseller of acetone in the ARA (Amsterdam-Rotterdam-Antwerp) region said it had not sold a single truck this week.

“We’re not able to sell any trucks. The producers are doing it all direct. I can buy €845/tonne FCA.

“For this week, I would say €860-900/tonne FD, maybe even €895/tonne,” the reseller concluded.

Acetone is a by-product of phenol. For every tonne of phenol produced, 0.62 tonnes of acetone is made.

Phenol operating rates in Europe are currently running at around 60-70% because of a steep decline in major phenol derivative and market driver bisphenol A (BPA) into the polycarbonate (PC) and epoxy resins sectors.

Both downstream materials are heavily linked to GDP. They are also heavily produced in Asia, which has gradually become a self-sufficient market for phenol and phenol derivatives.

In addition, Asian imports of BPA are currently being offered at very competitive prices in Europe, to the extent that BPA producers are unable to drop their prices.

A major phenol producer said that phenol was coming into Europe at levels it was unable to compete with, just like BPA and epoxy resins

“For me as a phenol producer and seller, it’s like a sandwich.

“Phenol is coming into Europe cheaper than we can produce and on the other hand our customers have the same problem. BPA producers can see that their own product can be bought cheaper – I am really in a sandwich.

“This is an interesting development – making negotiations very difficult.

“Two sick people are asking for help, and I am sick as they are,” the producer concluded.

($1 = €0.74)

By: Julia Meehan
+44 20 8652 3214

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