August 31 news
Price Performance
In August, acetone in China saw a one-sided price increase. The mainstream spot prices in East China rose from about 6,000 CNY/ton at the beginning of the month to the range of 7,100-7,300 CNY/ton by the end of the month, showing a significant monthly price increase. Multiple rounds of factory price increases occurred during the month, with a rapid surge in the middle and late parts of the month. The 5/10/20 day moving averages all turned positive, indicating a clear technical signal for an upward trend, according to Sina Finance. Holders were reluctant to sell and held firm on prices, leading to continuously declining port and social inventories, tight spot supply, and a continuous rise in negotiation focus.
1️⃣ Supply contraction is the main driver of this round of market trends in China.
Chinese phenol and acetone plants are undergoing concentrated maintenance and operating at reduced capacity, resulting in a generally low production load; some large phenol and acetone companies have increased their self-use ratio, reducing the amount of product available for sale, leading to tighter market supply (such as the high self-use ratio of Ruiheng New Materials' plant). 2. Import supplies fell short of expectations: overseas shipments were delayed, and the volume arriving at ports was low. Combined with logistics disruptions such as typhoons, port inventory remained at a low level, with limited external replenishment. 3. Petrochemical plants in China have low inventory pressure, and they are raising factory prices in batches, providing strong support for quotations.
2️⃣ Cost Bottoming Out
Upstream prices of pure benzene and propylene are relatively strong, increasing the production costs of cumene-based phenol and acetone. This compresses the profit margins for companies, raises the bottom price, and limits the downward space, according to Sina Finance.
3️⃣ Downstream rigid demand for restocking supports the demand
Core downstream products such as bisphenol A, MIBK, isopropanol, and coating solvents maintained stable operations, with downstream factories replenishing their inventories in batches at low points. Although there was no explosive demand from the end-users, continuous purchases driven by essential needs, coupled with a shortage of spot supply, have pushed up transaction prices, leading to a warmer market trading sentiment in China.
4️⃣ Market sentiment amplifies price increase
The tight balance of spot supply has formed an expectation of price increases, with traders engaging in back-to-back transactions and holding back from selling, further amplifying the price increase within the month in China.
Subsequent Observation Points
Phenol and ketone maintenance unit resumption progress, changes in the volume of commodity releases; 2. Subsequent import shipment schedules and arrival volumes, and the turning point of port inventory in China; 3. Changes in the profitability and operation of downstream products such as bisphenol A and MIBK, and the sustainability of procurement at high prices; 4. Fluctuations in the costs of upstream benzene and propylene; 5. Typhoons, logistics, and other short-term disruptive factors.
Summary
In August, the upward momentum of acetone was driven primarily by contracted supply, with cost support, replenishment of essential inventories, and low inventory levels fueling reluctant selling—all resonating to push spot prices sharply higher. Whether this strong trend can continue in the future hinges on the pace of recovery at Chinese production facilities and the volume of imported supplies. If the increase in supply remains limited, the market is likely to remain in a state of high-level volatility; once supply resumes its normal pace, the upward trend will gradually slow down.
