Asia C3-based IPA output may grow as acetone prices surge

Author: Yuanlin Koh

2019/12/03

SINGAPORE (ICIS)--Propylene (C3)-based isopropanol (IPA) output in Asia may increase as acetone-based producers have been incurring losses caused by recent spikes in feedstock prices.

For the past year, low acetone values caused the majority of propylene-based IPA makers in the region to shut down their plants or run at reduced rates.

“If acetone keeps rising, and propylene keeps falling, more propylene-based IPA plants may resume/increase operations, increasing the competition of IPA,” said a Chinese trader.

Spot IPA prices have been struggling to keep up with recent strong gains in acetone values, with several major producers resorting to cutting production to stem losses amid weak demand.

IPA offers to southeast Asia were at $740/tonne FOB (free on board) NE (northeast) Asia, up by about $20/tonne from the previous week.

“Response to higher IPA offers have been lukewarm, so we don’t want to take any risks to buy more expensive acetone right now,” said a northeast Asian acetone-based IPA producer.

For the first time in a year, IPA’s price spread over both C3 and acetone feedstocks were below breakeven levels in the week ended 29 November, according to ICIS data.

ICIS Editorial Chart goes here

Spot IPA prices were assessed at $780/tonne CFR (cost & freight) SE (southeast) Asia, up 4% from mid-November; while acetone prices surged by 15.3% over the same period to $660/tonne CFR CMP (China Main Ports).

IPA’s price premium over acetone has been below the healthy level of $250/tonne since late October.

The IPA-acetone price spread has narrowed to about $60-80/tonne in the second half of November.

ICIS Editorial Chart goes here

In contrast, prices of propylene have declined by 3.5% in the last two weeks of November to $830/tonne CFR NE Asia, ICIS data showed.

This has boosted competitiveness of C3-based IPA over acetone-based material.

At least two propylene-based  IPA plants in China have consequently restarted operations although they are running at reduced rates.

Focus article by Yuanlin Koh

Photo: IPA has applications in cosmetics, personal care products, among others. (By Jeff Tzu-Chao Lin/imageBROKER/Shutterstock)