July 30 news
In July, the Chinese acetone market showed a strong reversal and upward trend, completely reversing the deep decline in June. The market rhythm in July was clear: steady price increases in the first ten days, accelerated price hikes in the middle of the month, and stabilization at high levels in the last ten days. The price center continued to rise, and the market trading activity significantly warmed up, with a notable price increase in the chemical sector, showing an overall trend of strengthening. At the beginning of the month, major manufacturers adjusted prices to support the market, stimulating bullish sentiment, and the market saw a significant recovery from the previous price decrease during the month.
1. Supply-side contraction lays the foundation for price increases: In July, phenol and acetone plants in China entered a concentrated maintenance period, with industry operating rates falling below 70%, reaching the lowest level in nearly a year, resulting in a monthly production loss of 85,900 tons. At the same time, port supplies and social inventories remained low, leading to tight market spot circulation. Holders were reluctant to sell at lower prices, and the direct supply gap in the spot market pushed prices steadily upward.
2. Demand recovery effectively absorbed the price increase: In June, the price of acetone hit a low point after a significant drop, providing a window for downstream industries to stock up at low prices. In July, the rigid demand from downstream sectors such as coatings, solvents, and chemical intermediates was released in a concentrated manner. Companies took the opportunity to replenish their inventories, leading to a continuous rise in market transaction activity. The robust purchasing power fully absorbed the spot inventory, creating a positive cycle of "recovery in transactions and rising prices," which supported the continuous upward trend in the market.
3. Cost and emotional factors boost market elasticity: In July alone, the price of upstream raw material pure benzene rose by 8.12%, significantly increasing production costs for phenol-ketone manufacturers and providing solid bottom support for acetone prices. Meanwhile, the overall commodity market sentiment remains strong, with the entire industrial chain showing signs of recovery. Coupled with concerted price-stabilization and adjustment efforts by leading companies, this has completely reversed the previously pessimistic market sentiment. On the trading side, bullish sentiment and stockpiling behavior are intensifying, further amplifying the monthly increase in prices.
From a short-term technical indicator perspective, the difference between the 10-day moving average and the 20-day moving average of spot prices for acetone in July continued to widen, fully confirming the validity and sustainability of this upward trend. After the acetone price bottomed out and rebounded in early July, the 10-day moving average quickly turned upward. Entering mid-to-late July, the 10-day moving average steadily operated above the 20-day moving average with a steady upward pace, and the difference between the moving averages maintained a positive expansion trend. The overall continuous positive expansion of the 10/20-day moving average difference became the core technical support for the trend of rising acetone prices in China's market in July.
Let's look at the current acetone market. The short-term strong pattern remains unchanged, with a solid 10/20-day moving average structure, providing technical support for high prices. However, there is a risk of marginal weakening in the subsequent market trend. As previously shut-down facilities gradually resume production, market supply will gradually recover, and the tight supply and demand situation will ease to some extent. At the same time, as prices reach high levels, the willingness of downstream buyers to chase higher prices may cool down, leading to weaker demand-side support. In the future, the acetone market will likely end its one-sided upward trend and enter a phase of high-level fluctuation and supply-demand bargaining. The difference between the two moving averages may gradually narrow, with increased market volatility. Overall, the market will stabilize, and the upward trend will slow down.
