05 December 2013 17:44 [Source: ICIS news]
LONDON (ICIS)--European acetone spot prices remain under downward pressure despite higher feedstock costs, largely because of poor demand and destocking, sources said on Friday.
“The acetone market is quiet and boring. I would say a little bit of a touch down. I saw prices at €850-860/tonne ($1,449-1,162/tonne) FD (free delivered),” said a trader.
The trader added that it did not have much volume available and was therefore not so active, but it had seen lower prices in the market.
A second trader quoted €820-840/tonne FD.
“Prices could be €840, as well as €820/tonne to some end-users – depending on where you go,” the trader said.
Although most sources in the trade and distribution market were feeling some price pressure because of weak demand, one ARA (Amsterdam-Rotterdam-Antwerp)-based trader described business as “rather good” and quoted spot acetone at €880-900/tonne FD.
This was in contrast to a quote by a producer at €830-870/tonne FD NWE this week.
While the spot market is under pressure from slowing demand and destocking, producers said that fundamentally stocks remain tight because of cuts in phenol operating rates.
Acetone is a by-product of phenol. For every tonne of phenol made, 0.62 tonnes of acetone is produced.
Phenol operating rates are estimated to be running at 60-70% in Europe, although a benzene producer said it would be reducing production further in December because of the steep rise in the cost of feedstock benzene, which has depleted already weak December demand.
The European December phenol contract price moved up €109/tonne following the same increase in the value of major feedstock, benzene.
A three figure increase in the benzene contract price was described as “a disaster”.
In relation to the benzene hike, a major buyer said: “This hike in benzene is completely overdone. It’s nothing to do with fundamentals.
“We need to get out of this benzene plus – it’s just killing everything – our December volumes will be down because of the heavy benzene increase.”
On the selling side, a major producer said phenol customers had “backed orders” and were taking minimum volumes because of the benzene hike.
“Phenol people have backed orders. November has become the new December – December is really slow.
“They are taking minimum volumes – the increase on benzene and the consequence of benzene has stopped the [phenol] market,” the producer said.
The December propylene contract price settled at €1,110/tonne, up by €30/tonne from November.
($1 = €0.74)
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