US acetone supply constrained, players monitor feedstocks and imports
Tarun Raizada
14-Aug-2020
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
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