Europe acetone spot deals settle at lower prices

28 March 2014 16:05 Source:ICIS News

LONDON (ICIS)--European acetone spot deals have been settling at lower prices on the back of improved availability, market participants said on Friday.

Operating rates rose marginally at the start of March due to an increase in demand for co-product phenol.

“I’ve not seen a shortage of acetone,” said one buyer.

“[You] can get plenty. Producers are looking for every excuse to hold price, to prevent a big drop. Margins on phenol are good, output on phenol is better [than earlier in the year],” said one distributor.

In addition, the expected pick-up in solvent demand for the coatings industry has so far failed to materialise.

“It’s really quiet, nearly nothing going on. [There is] no demand,” said one distributor.

Product is said to be shorter in eastern Europe, with Russia’s Omsk Rubber unit now reported to be out for most of the year. Meanwhile, Poland’s PKN Orlen has a scheduled maintenance planned for late April. As a result, prices are said to be higher in the that region.

“Acetone is more tight in eastern Europe… Spot prices in eastern Europe are better than for north-western Europe: €950-1050/tonne [free-delivered (FD)],” said a producer.

The lowest price have been seen in the Benelux region (Belgium, the Netherlands and Luxembourg), around the ports of Antwerp, Rotterdam and Amsterdam.

“Acetone [is a] very mixed picture… [We] still sell at levels 960-970 [€/tonne FD] for one party and another party 930,” said a second distributor.

There is considerable uncertainty about the direction of future pricing, with upside and downside risks. On the bullish side, coatings demand could start up going into April. In addition, raw material availability could limit production.

Cumene is not easy,” said a second producer.

“[We are] not turning down rates, [we] are being careful about taking additional orders… Raw material guys are scrambling a bit more,” said a third producer.

On the bearish side, April does have less working days than March, given the Easter holidays. Also, with Asian acetone prices being substantially lower, there is a risk of the trade balance between Europe and Asia swinging towards Europe.

“[There is] only one [producer] exporting volumes. I don’t know if [they will] continue to do this. If that product becomes available, [the European] market will be long and prices fall,” said the second producer.

By Rhian O'Connor