LONDON (ICIS)--European acetone prices have firmed on the back of expectations that feedstock costs will rise and the supply and demand balance will tighten in January, sources said on Friday.
At least two major producers were talking of spot pricing of over €900/tonne ($1,233/tonne) free delivered (FD) Amsterdam-Rotterdam-Antwerp (ARA). This compares with spot prices last week of €840-870/tonne.
Some rise in prices was confirmed by other market participants.
“At the beginning of December we were seeing prices around €800/tonne, but now delivered offers are closer to €880/tonne”, said one trader.
However others played down the increases.
“Spot prices are not really better than last week, maybe at best €10-15/tonne more”, said one market participant.
The upward pressure on prices is due to a number of factors. The market expects a strong pick-up in demand in January which, coupled with supply tightness, could put a squeeze on prices. With December trades effectively finished ahead of the holiday season, some sources talk about buying already for January.
“People like to cover early January needs now”, said one producer.
Rising feedstock costs, especially of key intermediate propylene, are also compounding the problem.
Finally the shortage of product in the UK is said by some to have a knock-on impact into pricing in mainland Europe.
Acetone pricing has had a rollercoaster ride in 2013 with peaks of up to €1,150/tonne in February and a second peak of €1,010 in September. However recent pricing has been weaker, with spot prices at €855/tonne in early December. This was due to poor demand for the key plastic and resin end market.
“[The] acetone market over-corrected on the downside,” said another producer.
The outlook for 2014 seems to be just as interesting, with more market participants preparing for another rocky ride.
($1 = €0.73)