US July barge acetone rises on feedstock pressure

29 July 2014 23:25 Source:ICIS News

HOUSTON (ICIS)--US barge acetone contract values increased by 1.25 cents/lb ($28/tonne) for July, market sources confirmed on Tuesday, mostly citing pressure from stronger feedstock refinery-grade propylene (RGP).

The increase for large-volume barge acetone buyers took the July contract to 63.50 cents/lb, market participants confirmed, up from June’s contract settlement of 62.25 cents/lb.

Sources acknowledged pressure from RGP, which has increased in price by more than 9% in the last four weeks. While a seller said tighter supply was also a factor, a buyer said supply had not been problematic.

The US barge acetone contract is typically negotiated between three large producers – Axiall, INEOS Phenol and Shell, and the three largest buyers – Dow Chemical, Evonik and Lucite.

In the meantime, truck acetone contract values were assessed flat for July even as a spate of August price-hike initiatives surfaced in the past week or so.

All of the major producers announced truck initiatives of 4-5 cents/lb, effective mostly in early August, with sources citing largely balanced supply pressured by higher upstream costs.

There is broad support for the initiatives, sources said. A couple of the efforts were announced for late July, but with most scheduled for 1 August, no pricing movement was expected until then.

Buyers said they do not expect to know until mid-August exactly how much will stick, but sources throughout the market said upward pressure includes stronger upstream refinery-grade propylene (RGP), ongoing truck transport constraints and rising cumene costs stemming from sharply higher July contract benzene.

Major US phenol-acetone producers include Axiall, Dow Chemical, Haverhill Chemical, Honeywell, INEOS Phenol, SABIC Innovative Plastics and Shell Chemical.

By Larry Terry