First, the supply in the Chinese acetone market declined as the units inSinopec Beijing Yanshan Company, Kingboard Chemical and CCS were shut.Moreover, some goods were exported and acetone producers held reasonableinventories. In Shandong, units of MMA, BPA, MIBK, IPA and isopropamide rannormally. The consumption for acetone was higher than the production. Someusers had to purchase acetone via other ways.
Furthermore, theunit at Shanghai Sinopec Mitsui Chemicals will undergo maintenance in July andAugust. The overall operating rate in the phenolic ketone market will decline,which will weigh on the supply of acetone.
Finally, the inventory at port was not high. International acetoneproducers showed little interest in exporting goods to China. Hence, the importvolume from May to July will decline.
Downstream applications of acetone have high profits, such as MMA and MIBK.The BPA units run at high operating loads. It is heard that the BPA unit at PTTwill be shut in early July, which will boost the operating rate of Chinese BPAindustry. The trading of MMA is satisfactory and the operating rate will ensurethe consumption of acetone. Besides that, other downstream industries ofacetone will run normally and the demand for acetone will be firm.
With the increases in acetone prices, the productioncost pressure of phenolic ketone units eased. But, the profit in H1, 2017 wasnot satisfactory. Producers still have production cost pressure, which willensure the price of acetone.
Bearish Macro Environment
First, thedecreasing crude oil prices led to more bearish sentiments in the chemicalindustry. Then, the rise US interest rate will make the dollar become stronger,which will weigh on the commodity market.
On the whole, the acetone market will be promising inthe long term on the suppy-demand basis.
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