Price and market trends: Europe acetone prices pressured

08 November 2013 10:00 Source:ICIS Chemical Business

Prices continue to fall with propylene feedstock, even as producers claim product tightness

European acetone spot values continue to come under pressure, further compounded by another fall in major feedstock propylene, sources said on 31 October.

The European propylene contract price for November settled at €1,080/tonne ($1,479/tonne) FD (free delivered) NWE (northwest Europe), down €30/tonne from the previous month.

Acetone spot prices have been gradually moving up since the start of July, peaking in October and since then declining sharply.

A number of key market figures were unsure why spot prices have declined, but it is thought that demand has tailed off and some sellers in the trade and distribution sectors were destocking ahead of further losses in the value of propylene, as well as benzene.

“Propylene adds to the pressure, although the market is still fundamentally tight,” said a seller of acetone to the European market.

In the distribution market, a source said: “For acetone, the fundamentals have not changed. In theory, acetone [prices] should have gone up, but people underestimated the slow demand – never mind the feedstock. The price of acetone is supply and demand driven. This is the whole story.”

Meanwhile a trader quoted an FCA (free carrier alongside) price for spot acetone at €850/tonne.

“Prices are further crashing down. We got the first orders at €850/tonne FCA. I would say €900-920/tonne DDP [delivered duty paid] so €950-960/tonne FD (free delivered).

“These are the lowest numbers – I don’t see it increasing, but I don’t know why prices have come down. I don’t think acetone is a long market,” the trader concluded.

A producer, selling spot acetone, quoted €930-950/tonne as it price range.

“We are more or less following the levels of the end of October. Without big jumps, we are more or less proposing the same prices – €950-930/tonne FD.”

A second producer quoted a similar range at €940-950/tonne FD NWE (northwest Europe).

MARKET TIGHTNESS
A third producer acknowledged that spot acetone prices have eased, but it too was unsure why.

“There is not a lot of product around. Fundamentally the market is still tight,” it said.

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 for major phenol derivative and market driver, bisphenol A (BPA) into the polycarbonate (PC) and expoxy 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 BPA prices.

Talking about the BPA market, a trader said: “Spot BPA is available from Korean importers at €1,350/tonne. What is interesting is that even the Russians don’t want to go with this number. European producers would need to add €100/tonne [onto this price], because €1,350 is really low.”

By Julia Meehan