India resists March acetone price hike on ample import arrivals

28 February 2014 09:52 Source:ICIS Chemical Business

Acetone buyers in India are resisting a proposed $20-30/tonne price hike for March-shipping cargoes, expecting substantial volume of imported material to arrive in the country, market sources said on 19 February.

Offers for March-loading acetone cargoes from Taiwan were announced during the week ending 21 February at $1,180-1,190/tonne FOB (free on board) Taiwan, equivalent to $1,250-1,260/tonne CFR (cost and freight) India, market sources said.

On 12 February, spot acetone prices were assessed at $1,210-1,240/tonne CFR, according to ICIS data.

Scheduled turnarounds at production facilities across Asia will limit spot regional supply next month, market sources said.

But India has booked around 13,500 tonnes of imported acetone that are due to arrive in the first half of March. The volume was almost double the 7,000-8,000 tonnes of the country’s monthly imports, market sources said.

Asian producers have increased their allocation to India in February because of weak demand and lower offtake in China during the Lunar New year holidays earlier this month.

The Lunar New Year, which falls on 31 January, is celebrated in most parts of southeast and northeast Asia.

With huge volumes of acetone expected to hit the Indian market, domestic prices of the material may come off, market sources said.

Imported cargoes are being offered in the ex-tank markets at Indian rupees (Rs) 88.50/kg ($1,423/tonne) ex-tank in Kandla on 19 February.

Prices have remained largely firm since early February as supply has been scarce in the local market.

“All the February bookings will arrive and flood the Indian market, and domestic prices will drop. It will be difficult for us to realise a higher price in the local market for March cargoes,” an Indian importer said.

Acetone, which is used as a solvent in the manufacture of pharmaceuticals and industrial coatings, is a by-product of phenol.

Weak phenol demand for a significant portion of 2013 prompted regional producers to reduce output for much of the year, capping acetone availability in Asia.

Producers continued to operate at reduced rates this year amid margin pressures on phenol, keeping the supply of by-product acetone limited.

In March, a number of phenol-acetone facilities in Asia are due for turnarounds, which will further squeeze supply, market sources said.

Meanwhile, India is expected to announce soon an anti-dumping measure on acetone imported from Taiwan that currently enjoy zero duty. This may cause importers to cap their price ideas as they hesitate to procuring cargoes.

India has initiated investigations on imports of acetone from Taiwan and Saudi Arabia in July 2013, with no official date when finding will be announced. Market sources, however, are generally expecting the antidumping duties on Taiwanese cargoes to be slapped in March.

“An ADD could be imposed on Taiwanese cargoes. If this announcement comes out in March, it will affect prices for March shipments. So it’s difficult to accept a higher price for March at this moment,” an Indian acetone trader said.

A Saudi Arabian producer, meanwhile, has kept away from the Indian market amid the ongoing ADD investigations, opting to wait for an official announcement, market sources said.

The Indian market largely imports acetone from Taiwan, South Korea, Singapore, Saudi Arabia and Thailand.

By Veena Pathare