OUTLOOK ’18: Asia acetone cautiously stable as supply adjusts

SINGAPORE (ICIS)–Asia acetone market sentiment is cautiously stable with more allocations expected to the US following the idling of one line at Shell Chemicals in Texas, but the outflow could be balanced by upcoming capacity expansion in the region.

As of August 2017, imports to US had reached nearly 81,000 tonnes.

Of the imports up to August 2017, nearly 50% was of Asia-origin. South Korea account for more than 24,000 tonnes while second highest contributor, Taiwan, sold more than 15,000 tonnes.

By comparison, imports to US were at more than 93,000 tonnes in 2016.

Most market players expected the import volume to be higher in 2017, as compared with 2016.

US’s Shell Chemicals announced in November that it would idle its Phenol 3 plant at its Deer Park facility in Texas in mid-January 2018.

The plant produces about 144,000 tonnes of acetone per year.

Prior to the announcement, SABIC Innovative Plastics experienced production issues at its Mount Vernon plant in Indiana.

Subsequently, Hurricane Harvey occurred from H2 August to early September.

In the wake of the hurricane, Shell Chemical had a site shutdown, while INEOS Phenol issued a force majeure. Olin too issued a force majeure on non-pipeline deliveries.

Due to the production loss from August to October, several US buyers actively sought Asia-origin cargoes to meet the gaps in their inventory requirements.

Whilst discussions levels were at $650/tonne free on Board (FOB) NE Asia before the hurricane, deal levels were heard at $700/tonne FOB NE Asia, amid discussions at $750/tonne FOB NE Asia after the hurricane.

As of mid-December 2017, prices were at its highest levels since H1 March following a six-week climb.

Though the price increases did not reach historical highs like co-product, phenol, market players were surprised by acetone’s uptrend in 2017 from Q2 onwards.

Market players had expected volumes to be sufficient, following the new start-ups of Thailand’s PTT Phenol and South Korea’s Kumho P&B in 2016.

Many players had initially not expected the outflow of Asia-origin volumes but Harvey changed that.

On the other hand, the outflow of Asia-origin cargoes could be balanced by the upcoming capacity expansion.

Company	Location	Phenol (kt/year)	Acetone (kt/year)	Expected start-up
CNOOC and Shell Petrochemicals Co (CSPC)	Huizhou, Guangdong province, China	220	130	Feb 2018
Deepak Phenolics	Dahej, Gujarat State, India	200	120	After Q1 2018

Downstream capacity expansion 

Market players were cautious that the minimal downstream capacity expansion would provide scant support for acetone prices in 2018.

Zhuhai Long Success is eyeing to launch a MIBK plant of 30,000 tonnes/year. The exact date could not be immediately confirmed.

For bisphenol A (BPA) and isopropanol (IPA), no new plant was heard to be starting up in the upcoming year.

Two new methyl methacrylate (MMA) plants started up in China in 2017, with Wanhua Chemical scheduled to start up in H2 2018.

The Yantai-based plant will have a 50,000 tonne/year methyl methacrylate (MMA) plant and an 80,000 tonne/year polymethyl MMA (PMMA) plant.

However, all these three plants do not use acetone as a feedstock.

Separately, PetroRabigh is likely to start its MMA production in Saudi Arabia in the first half of 2018, according to sources.

This plant is heard to be using acetone as feedstock, according to a couple of market players.

Outlook article by Angeline Soh