OUTLOOK ’17: US acetone could face import challenges
By John Dietrich
HOUSTON (ICIS)–The US acetone market could face some import challenges on tight supply and steady margins as the market takes some time to return to a balanced position.
Sources said that although the US should have a feedstock advantage, length in the Asian market could put pressure to move product into the US.
The US is expected to start 2017 with balanced to tight supplies, and little ability to increase operating rates to boost inventories.
This is because margins on phenol, the main product in the phenol/acetone production chain, are thin.
With acetone margins unlikely to spike enough to make up for phenol, acetone production could be limited to below-desired levels from buyer perspectives.
That was one factor that led to major import volumes from Asia throughout the second half of 2016, in addition to production and transportation issues.
The potential ceiling on acetone supply is also expected to keep margins healthier relative to feedstock refinery-grade propylene.
In the large-buyer market, sources expect demand to remain strong, mostly from the methyl methacrylate (MMA) sector. A slight slowdown early in the year could allow for some inventory building of acetone, but demand should be strong from the second quarter on.
This could offset any losses from bisphenol A (BPA) producers, who continue to face increased downstream competition from Asian producers of epoxy resins and polycarbonate (PC).
Demand from the truck and rail market for solvent production is not expected to grow more than overall US GDP levels, sources said.
There should be some slight improvement in supply year on year, as producer Altivia is expected to continue running its second phenol/acetone line at its Haverhill plant in Ohio.
The line was restarted late in the fourth quarter, sources said.
Major US acetone producers include AdvanSix, Altivia, INEOS Phenol, Olin, SABIC and Shell Chemical.