AFPM '19: US acetone markets soft amid oversupply, ADD uncertainty

Source: ICIS News

2019/03/23

HOUSTON (ICIS)--US acetone markets may have reached a low point on prices as key feedstock refinery-grade propylene (RGP) has softened, oversupply persists and an antidumping investigation may temper imports.

Heading into this year’s International Petrochemical Conference (IPC), downward pressure persists for March but market players say that prices going forward may linger around current levels in the absence of further pressure from low-priced imports.

“I think we’re at the bottom,” a source said. “There’s too much brewing in the air right now for anymore softening.”

RGP’s decline from mid-February to mid-March did not factor much into February large-buyer barge contract negotiations, but did weigh on March barge contract prices.

Smaller-market truck and rail prices, which have been more sensitive to oversupplied conditions than large-buyer contracts, are still under some downward pressure as players fight for market share.

Oversupply continues despite three producer outages in the first quarter. The three subsequent force majeure declarations were limited to co-product phenol as acetone inventories were high.

Production rates will ramp up by late March, but producers have reduced from the strong rates of 2018.

“There is some tempering of domestic production to manage the acetone balances,” a source said, who added that producers would run harder if they had a home for the excess acetone.

Import values have been steady since the ADD probe was launched.

Market players have hesitated to  move material with the risk that it may land after the 5 April preliminary ruling and face higher fees.

“There’s not too much on the water right now,” a source said. “If you bring something over that lands in May, you’re going to have to pay more.”

Import volumes in 2018 were significantly higher year on year, and prices for the material plummeted to well under domestic values.

A move higher for domestic prices would not be unreasonable as using foreign suppliers may pose financial risks with potential duties on the horizon, a source said.

“I think this will have more effect on pricing than people think,” the source said.

March barge contracts were 32 cents/lb ($705/tonne) on a DEL (delivered).

March truck prices await wider market confirmation, but February truck prices are 31-36 cents/lb DEL for the US Gulf and 32-37 cents/lb DEL for the Midwest.

Major US acetone producers are INEOS Phenol, Altivia, AdvanSix, Shell Chemicals, SABIC and Olin.

Hosted by the American Fuel & Petrochemical Manufacturers (AFPM), the IPC takes place on 24-26 March in San Antonio, Texas.

Focus article by Amanda Hay