US acetone supply constrained, players monitor feedstocks and imports

Author: Tarun Raizada

2020/08/14

HOUSTON (ICIS)--US acetone is being pressured by supply constraints, as players monitor developments in feedstocks and imports over the next couple of months.

PRICES
Supply of feedstock refinery-grade propylene (RGP) is increasing on higher refinery utilisation, but US propylene volumes from refineries might be constrained as refinery complexes see cuts in operating rates over the next few weeks, according to Paolo Scafetta, ICIS senior olefin analyst.

There were mentions of spot acetone prices moving up this month amid limited availability, especially for barge material. Several producers are separately seeking 5 cent/lb ($110/tonne) price increases for August.

Spot barge prices were quoted in the mid-40s cents/lb free on board (FOB), while spot truck prices were quoted in the upper-40s cents/lb FOB.

The supply situation is providing some upward momentum to methyl methacrylate (MMA), as barge acetone contracts have risen three months in a row.

SUPPLY/DEMAND
Requests for spot material continue amid minimum contract volumes, as demand is heard to be holding up, lending support to current high prices.

Despite the volatility present in the market, a player said order patterns have not changed, with no urgency or delay noted.

Production in the auto sector is improving, but is being complicated by the surge in coronavirus cases. A full recovery will be contingent on the sector overcoming recessionary headwinds, as sales may not rise in tandem with production.

The business environment remains challenging amid the pandemic, causing visibility around future demand to be limited.

OUTLOOK
In general, players agree that supply will likely remain tight for the rest of the year, with some also anticipating the start of turnaround activity in H2 2020.

With higher-priced domestic feedstocks and the steep fall in Asian prices, imports are likely to play a larger role in September and October. The spot China Main Port (CMP) price has fallen by $430/tonne since June, a 41% drop.

It is unclear if import volumes will be large enough to alleviate any supply pressure and impact domestic prices.

Acetone can be used in solvent applications and in the manufacture of chemicals for the coatings, plastics, construction and automotive industries.

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

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Focus article by Tarun Raizada

Thumbnail image shows a bottle of acetone. Photo by Jochen Tack/imageBROKER/Shutterstock