Asia's acetone sentiment soft in first half 2019 on supply deluge

04:36' PM - Friday, 11/01/2019

Asia's acetone market is likely to remain weak in the first half of 2019 as a result of supply deluge while demand may not see any improvement.

More phenol/acetone volumes were added from the recent restarts at China-based plants from maintenance to an already-ample market.

On 21 December 2018, acetone prices on a cost and freight rate (CFR) China Main Port (CMP) basis were at their lowest levels since 26 February 2016, at $400-420/tonne CFR CMP, according to ICIS data.

Despite a series of turnarounds scheduled in the last three months, acetone supply remained high.

This was due to high operating rates in China, motivated by strong margins of co-product, phenol.

The average run rate at phenol plants in China stood at more than 80% in 2018 whereas average operating rate in the country was 70% in 2015, 71% in 2016 and 76% in 2017.

The phenol/acetone production process involves one tonne of benzene to make one tonne of phenol and 0.6-0.62 tonnes of acetone.

The acetone prices in 2018 were curbed by the high import volumes.

From January to November, China’s acetone imports were at 622,000 tonnes, as compared with 454,000 tonnes recorded in January-November 2017, according to customs data.

The average port volume on a monthly basis was less than 24,000 tonnes in 2017.

In 2018, this figure was at more than 34,000 tonnes.

Meanwhile, the supply is set to increase when Zhejiang Petrochemical's 250,000 tonne/year acetone unit starts in the second quarter, according to market participants.

Changshu Changchun would expand their Changshu-based plant in China to 240,000 tonnes/year from 180,000 tonnes/year.

Although these plants will have downstream units, such consumption will not completely utilize the additional capacities.

The additional volumes will be sold to the open market.

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