European spot acetone prices see further increases

03 January 2014 14:33 Source:ICIS News

LONDON (ICIS)--European acetone spot prices continue to rise, with demand expected to restart from next week on the back of buyers returning to the market after the holiday season,sources said on Friday.

Spot prices are now assessed at €850-900/tonne ($1164-1233/tonne) FD (free delivered) NWE (northwest Europe). This represents an increase of €20/tonne at the top of the range compared to late-December prices.

“The cheaper prices seen in the run-up to Christmas are now gone”, said one distributor.

Market participants talked of a marked price difference between immediate delivery and delivery at the end of the month.

“There is a big spread between delivery early and late January and that spread is widening”, said one major producer.

A trade was heard of at €880/tonnes FD between a major producer and a distributor. However, a number of sources talked of offers of up to €900/tonne for late January delivery.

The rise is said to be due to 3 factors: an expectation that demand will return to the market next week, rises in key feedstock propylene and an attractive export price.

Demand has been somewhat subdued over the holiday seasons, but buying is widely expected to recommence as participants return to the market next week. Seasonal restocking is expected to be coupled with some increases in demand for key end products like MMA . Operating rates are still low, thanks to low demand for co-product phenol and many expect a squeeze similar to that seen in 2013.

On top of this propylene rises of €20/tonne FD NWE in the January contract, and €30/tonne in December have yet to be passed on in spot prices.

“Producers are looking to pass on not only the January rises but December’s too”, said the distributor.

Finally high prices into Asia and other markets have made the export market more attractive.

“[The] export [market] is attractive but I have no product to export. If I do not see domestic prices above €900/tonne FD soon I will consider exporting instead”, said another producer.

Trading remains generally slow, with a number of market participants still away for the holiday season.

($1 = €0.73)