China acetone import prices may stay soft on ample supply

SINGAPORE (ICIS)–China’s spot acetone import prices may stay soft in the short term on abundant supply amid an influx in deep-sea cargoes and ample domestic availability.

Offers this week were at around $630-650/tonne CFR (cost & freight) CMP (China Main Port) for April-loading cargoes of multiple origins, down by around $10-20/tonne from last week, while buying indications were at $610/tonne CFR CMP.

On 9 March, acetone prices closed at $630-650/tonne CFR  China CMP, down by $150-170/tonne from 5 January, according to ICIS data.

Competitively-priced deep-sea cargoes from the US and the Middle East have been making their way to China and are expected to arrive in March and April, market sources said.

Meanwhile, Chinese importers saddled with high inventories are eager to secure buying interest by reducing their offers.

Market participants attributed the bearish sentiment to material being exported to Asia from the US, which has excess supply.

A major regional acetone supplier was cutting bisphenol A (BPA) operations to produce more phenol and acetone, market sources said.

In China, domestic acetone/phenol factories operated at optimal rates while majority of downstream factories ran at reduced capacities throughout the Lunar New Year holiday, leading to a surplus of acetone inventory at domestic factories.

China was on holiday on 15-21 February.

In terms of downstream operations, some end-users are operating at reduced rates amid the government’s stringent environment protection campaign, and have high inventories of feedstock at their factories.

Some downstream Chinese methyl methacrylate (MMA) factories were facing start-up issues, while the new recycling restrictions have also weighed on overall buying sentiment for acetone, market sources said.

On the downstream BPA front, buying sentiment remains tepid due to a slower-than-expected recovery in epoxy resins demand post-Lunar New Year.

Demand from the downstream methyl isobutyl ketone (MIBK) is also expected to weaken, with the scheduled month-long shutdown of Zhenjiang LCY’s 24,000/tonne year plant.

The downward pressure on the acetone market might be tempered by the relative tightness in regional supply.

Thai producer PTT Phenol expected to shut its plant, which can produce 250,000 tonne/year of phenol and 154,000 tonnes/year of acetone, for three weeks in May.

Focus article by Yaw Min Jie