AFPM ’14: Near-term US phenol-acetone outlook partly cloudy

30 March 2014 00:37 Source:ICIS News

HOUSTON (ICIS)--There is reason to anticipate near-term improvement in the US phenol and acetone markets, sources said heading into this year’s International Petrochemical Conference (IPC), but some remain doubtful.

Construction, once the weather clears, is a potential bright spot, but continued low phenol operating rates would constrain acetone supply if demand does improve.

It seems that the only thing market participants can absolutely agree on is that the huge demand deficit created by the loss of Asian export demand more than 18 months ago is not going to return any time soon.

Domestically speaking, however, phenol demand has been described as generally flat from a year ago. And housing numbers, which have been mixed lately, are more positive than negative.

Although demand from the housing market is expected to be delayed because of ongoing harsh winter weather in the northeast, most are confident that the market will be healthier this spring than it was last year.

Downstream signals, however, are somewhat mixed.

In spite of some recent positive housing numbers, US sales of new single-family homes fell by 3.3% in February from January, the Commerce Department recently reported.

Last month’s selling pace also was 1.1% below activity seen in February 2013. The recent decline partly offset a sharp 9.6% gain recorded in January, which had ended two months of declines, including a 7% drop in December.

Meanwhile, acetone is relatively healthy. Some have asserted that acetone is “carrying” phenol the way phenol carried acetone when Asia was taking as much as 30% of US production.

Phenol rates have hovered in the 60-70% range for more than a year, and rates are only temporarily higher among some producers who are augmenting supply to others in the midst of or planning spring maintenance.

Most sources say acetone supply is generally balanced to snug.

March large-buyer barge acetone contracts continued to be negotiated, although one or two settlements were confirmed at a level slightly higher than in February.

The March truck contract acetone range was assessed in a range of 77-81 cents/lb ($1,698-1,786/tonne), as assessed by ICIS.

Major US phenol-acetone producers include Axiall, Dow Chemical, Haverhill Chemical, Honeywell, INEOS Phenol, SABIC Innovative Plastics and Shell Chemical.

Hosted by the American Fuel & Petrochemical Manufacturers (AFPM), the IPC takes place 30 March-1 April in San Antonio, Texas.

By Larry Terry