US March barge acetone contracts expected to rise

HOUSTON (ICIS)–US March barge acetone contracts are expected to increase on higher feedstock costs and market tightness, sources said on Wednesday.

February contracts were settled at 49 cents/lb ($1,080/tonne) on DEL barge (delivered via barge) basis.

Since then, sources said upstream refinery-grade propylene (RGP) values are up 4-5 cents/lb, putting costs higher by around 3-4 cents/lb on an acetone production basis.

However, sources said it was unclear if RGP would rise by 4-5 cents/lb, with some excepting that the weighted average price would only be up around 3 cents/lb.

With acetone supply on the tight side, sources said they expect sellers to seek some margin expansion above production costs.

This has led some to expect a March settlement around 54-55 cents/lb DEL, or possibly higher.

Acetone’s level of tightness has been described by buyers as overstated, as they have been able to receive full contractual levels.

Additionally, a major downstream unit remains down and the company in force majeure (FM).

Sellers said that there is some demand for spot acetone, and that current inventories and production levels have severely restrained availability.

One seller said that if it had product to offer, it would expect a barge load on an FOB (free on board) basis to sell in the low-50s cents/lb.

Large buyers are also unable to obtain imported product from Asia, as supply there is also limited, and prices are unworkable or unattractive.

Overall, large-buyer acetone demand has been described as strong and outpacing current supply levels.

Major US acetone producers include AdvanSix, Altivia, INEOS Phenol, Olin, SABIC and Shell Chemical.

Above image: This puzzle piece is made of polymethyl methacrylate (PMMA), a major acetone derivative. Source: Markus Brunner / imageBROKER/REX/Shutterstock