SINGAPORE (ICIS)--Spot acetone prices in China’s domestic market may weaken further on poor demand, as downstream plants are either shut or running at reduced capacity.
At midday, spot discussion prices in east China stood at around yuan (CNY) 5,600/tonne, down by around 16% from the beginning of the month, according to the China editorial team at ICIS.
Domestic producers are facing inventory pressure as acetone plants continue to run at relatively high rates while demand has been sluggish, market sources said.
Some producers are eager to cut prices to relieve high inventory pressure, while some are considering reducing output amid continued price weakness, industry sources said.
In east China, sellers had cut their offers over the past three consecutive weeks by a total of 14% to CNY6,100/tonne EXW (ex-works) on 19 April.
Prices may continue their downtrend with limited deals being concluded, market players said.
Production at downstream solvent plants is being curtailed by ongoing environmental inspections at Chinese factories since the middle of March, thus reducing the demand for feedstock acetone, industry sources said.
But the slump in acetone prices has not translated to better stronger margins for downstream isopropanol (IPA) producers.
The margins for acetone-based IPA for Chinese producers currently stand at CNY300-400/tonne – less than half the CNY1,000/tonne margin for propylene-based production, according to industry sources.
Import arrivals will also play a role on how domestic prices in China will behave, a Chinese trader said.
China has imported about 35,000-40,000 tonnes a month of acetone in January and February, official data showed.
Market sources said the import volumes will likely decline in the coming months amid increased demand from Europe and the Americas.
China's February acetone import volume at 36,648 tonnes represented a more than twofold increase from the same period in 2017, according to the latest China Customs data. March data will be available later this month.
Focus article by Yoyo Liu
Picture: Acetone is a key ingredient in nail polish removers (WestEnd61/REX/Shutterstock)
($1 = CNY6.89)