Lead-in: The domestic acetone market has recently shown a trend of retreating from high levels. As of April 15th, the average negotiated price in the East China acetone market was 7,900 RMB/ton, a decrease of 375 RMB/ton compared to before the Qingming Festival (April 3rd). The subsequent trend will depend on the release of demand from downstream end-user factories.

(I) Market Price Fluctuations

Looking at the price adjustments by producers, the turning point from an upward to a downward trend occurred on April 10th. On that day, Sinopec East China lowered its acetone list price by 600 RMB/ton to 8,100 RMB/ton, while Sinopec North China lowered its price by 300 RMB/ton to 8,300 RMB/ton. Subsequently, on April 14th, Sinopec North China lowered its price again by 200 RMB/ton to 8,100 RMB/ton, bringing it in line with the Sinopec East China price.

From an international market perspective, the average CFR China acetone price fell by $35/ton month-on-month to $1,040/ton. The average CFR Southeast Asia acetone price rose by $10/ton month-on-month to $1,309/ton; the average CFR India acetone price fell by $45/ton from $1,594/ton to $1,549/ton.

Around the Qingming Festival, the East China acetone market maintained a firm and upward trajectory, with the average price in the Jiangsu market reaching a high of 8,450 RMB/ton on April 7th. After entering mid-April, a weakening sentiment emerged in the East China acetone market, with prices fluctuating around 8,000 RMB/ton, entering a pattern of volatile decline following a period of high-level consolidation.

The acetone market rose first and then fell in early April, shifting from a surge to high levels to a retreat. The core change was the weakening of the cost-driven logic, gradually shifting towards supply and demand fundamentals. Support from the cost side weakened, and the market's trading focus returned to supply-demand fundamentals. On one hand, downstream enterprises slowed their purchasing pace after following the previous price increases, showing reduced willingness to accept high-priced cargo. On the other hand, concentrated reductions in list prices by petrochemical companies intensified market wait-and-see sentiment. Holders began offering discounts to move cargo, putting downward pressure on market prices.

(II) Significant Port Inventory Drawdown, Decline in Domestic Phenol-Acetone Plant Capacity Utilization Rate

According to statistics from chempricehub, Jiangyin acetone port inventory stood at 33,000 tons on April 13th, a decrease of 7,000 tons compared to April 3rd.

Based on incomplete shipping schedule data from chempricehub, as of April 16th, acetone shipments to East China in April were estimated at 23,000 tons, with 18,200 tons already arrived and 4,800 tons in transit. Subsequent in-transit cargo mainly originates from South Korea, while the status of shipments from Saudi Arabia and Thailand is being followed up on.

Regarding the operating status of domestic phenol-acetone plants, on April 11th, Huizhou Zhongxin's Phase I and Phase II units switched operations; currently, the Phase II unit is running at full capacity while the Phase I unit entered maintenance. The 650 kt/year phenol-acetone unit at Shenghong Refining underwent a three-day wash tower shutdown. The 560 kt/year phenol-accetone unit at Moivy Chemical (Shanghai) was shut down for planned maintenance, with an expected restart date of May 23rd. As of April 15th, the capacity utilization rate of domestic phenol-acetone plants had declined to 77.30%.

Judging from the drawdown in port inventory and the changes in domestic phenol-acetone plant operating rates, overall domestic acetone supply is showing a declining trend. Despite this, some manufacturers still face sales pressure, leading them to lower list prices in response.

(III) Continued Compression of Phenol-Acetone Margins

According to statistics from chempricehub, the production margin for phenol-acetone enterprises was 292 RMB/ton on April 15th. Reviewing the earlier period, it increased from 508 RMB/ton on April 3rd to 639 RMB/ton on April 9th. Starting April 10th, it entered a narrowing channel, dropping to 342 RMB/ton on April 10th and further to 192 RMB/ton on April 15th, a cumulative decline exceeding 200 RMB/ton.

Looking at the main feedstock, pure benzene, domestic refinery maintenance in May is expected to reduce pure benzene production and imports. Port inventory is anticipated to continue drawing down, with active buying interest in the market, suggesting potential for further upward movement in the spot market. Cost-driven support still exists, but the ability of downstream sectors to pass on costs needs to be monitored, which may lead to further compression of margins in the phenol-acetone industry.

(IV) Three Key Variables Affecting Future Trends

1. Uncertainty in Cost Support: The situation in the Middle East remains fluid. If tensions persist, keeping crude oil prices high, phenol-acetone will still have cost-driven support. However, once external tensions ease, the interplay of supply and demand will become the dominant factor in market fluctuations.
2. Sustainability of Supply Tightness: Port inventory has currently dropped to a relatively low level of 33,000 tons, but the low operating rate of 77% may not last too long. The arrival schedule of imported cargo will directly impact short-term inventory supply changes.
3. Absorption Capacity of Downstream Demand: While profit margins in most downstream industries have seen some recovery, their ability to pass on costs downstream remains to be verified. The procurement pace of end-users before the May Day holiday will be key to whether short-term prices can stabilize.

In summary, in the short term, the acetone market will see a tug-of-war between cost-driven support, low inventory levels, and follow-through from end-user procurement. Prices are likely to fluctuate and consolidate within the range of 7,800-8,000 RMB/ton. The core factors for the medium to long-term trend still require close attention to the evolution of the Middle East situation and the release of downstream demand.