Overview: The recent sharp uptrend in the acetone market has been driven by a combination of cost push, tight supply, and a modest recovery in demand. Looking ahead, the acetone market faces a blend of bullish and bearish factors. Overall, prices are more likely to come under pressure and pull back, though cost support should keep any decline limited—possibly resulting in rangebound trading.
1. Cost-led support is a key underpinning for the upward move
Prices of feedstocks benzene and propylene have trended upward, creating a solid cost floor for acetone. Supported by costs, acetone prices have continued to climb. In East China, benzene prices have risen sharply recently. With geopolitical conflicts escalating, international crude oil prices surged, which strongly lifted benzene prices from the cost side. After the rally, resistance from essential end-user demand was evident, and downstream players sold down feedstock inventories, leaving overall market trading sentiment somewhat muted. Propylene supply has increased at a slow pace, keeping availability generally tight, while the strong crude rally continued to lift producers' offer prices. Downstream essential demand provided sound underlying support, pushing the transaction center of gravity higher, although the premium on confirmed orders weakened.
2. Tightening supply is the core factor underpinning the market's advance
On the domestic supply side, with Shenghong Refining & Chemical's unit back to normal operation and Moyiwei Chemical (Shanghai)'s phenol/acetone unit shut down for scheduled maintenance as expected, the offsetting effects left domestic phenol/acetone capacity utilization at around 74%. Imported cargoes previously delayed by typhoon weather kept port inventories fluctuating around 10,000 tonnes. Insufficient replenishment from vessel arrivals continued to keep spot supply tight, providing direct momentum for acetone price gains.
According to Chempricehub shipping data, cargoes in transit in early September totaled 10,300 tonnes, with 7,300 tonnes expected to arrive this week and another 3,000 tonnes in transit for next week. Replenishment at East China ports has been limited. As of September 4, Jiangyin port inventory had risen to 13,500 tonnes.
3. Demand has picked up modestly
Table: Capacity utilization of major downstream sectors
| Product | Sep 3 | Aug 27 | Change (pp) |
|---|---|---|---|
| BPA | 62.83% | 62.24% | +0.59 |
| MMA | 62% | 62% | 0 |
| Isopropanol (IPA) | 42.91% | 43.17% | -0.26 |
| MIBK | 48.82% | 48.42% | +0.40 |
Source: Chempricehub
Bisphenol A (BPA): This week, Nantong Xingchen's and Shandong Fuyu's BPA units remained shut down, Nanya's Line 1 was down while Line 2 was restarted, Gaoqiao Materials and Qingdao Haiwan returned to normal operation, Shandong Ruilin's unit was restarted, and Guangxi Huayi's unit was raised to 80% of capacity. As of September 3, BPA capacity utilization rose 0.59 percentage points week on week to 62.83%.
MMA: One line at Zhejiang Petrochemical and one unit at Jiangsu Sailboat were restarted on September 3, keeping ACH-route MMA capacity utilization around 62%. Next week, another Jiangsu Sailboat unit and the Liaoning Jinfa unit are scheduled to restart, so MMA capacity utilization is expected to improve.
Isopropanol: Qingdao Haiwan's IPA unit has been shut down for a longer period, and IPA capacity utilization via acetone hydrogenation slipped slightly this week. With Dezhou Detian's unit scheduled for maintenance later on, IPA industry capacity utilization may fall further next week.
MIBK: Ningbo Zhenyang returned to full-load operation this week, lifting MIBK industry capacity utilization to 48.82%.
Although downstream sectors such as MMA and MIBK have new capacity slated to come on stream in the fourth quarter—which in theory would create rigid demand for acetone—actual execution remains uncertain. More importantly, acetone prices are already at a stage-high level, putting considerable cost pressure on downstream industries. With the exception of MMA, which remains profitable, downstream BPA, IPA, and MIBK sectors are all loss-making, which constrains any further push to raise acetone prices.
Overall, the acetone market is likely to maintain high-level rangebound trading in the near term, underpinned by cost support and tight supply. In the medium to longer term, however, as supply recovers and downstream demand follow-through is limited, the market will face growing downward pressure, and a pivot to weaker trading is likely to become the main theme.
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