Why Did the Acetone Market Move Up in Nov 2017?

Market Review: The Chinese acetone market moved up in November 2017. Crude oil prices hit a new high, which boosted the prices of propylene and benzene. The inventory of acetone was modest. Some producers even limited the sales volume. As for the demand, it remained firm. Moreover, the prices of substitutes moved up, which promoted the demand for acetone. Up to November 30, the closing prices for acetone in Jiangsu were in the range of RMB 6,150-6,200/mt, up RMB 700/mt month on month. The average price was RMB 5,778/mt, up RMB 165/mt or 2.94% month on month.   

Forecast:

In the short term, the supply of acetone will be stable. Mitsui won’t supply goods to the market in the short term. Formosa will continue to limit the supply volume. Zhongxin Chemical will cut the operating rate in December, which will influence the supply in South China. The unit in eastern of Sinopec Beijing Yanshan Company will shut, and the supply in North China will be slightly tight. In December, the supply will inch down from last month.

With the prices increasing, the arbitrage window of import has opened. The import volume will increase. Players should focus on the changes at ports.

Some downstream units of acetone will shut in December. However, given the high profits, the overall operating rate in downstream industries will be firm. In December, the crude oil prices may slide on the reduction agreement. Propylene and benzene prices may go down. But the phenol market will be high. The profits of BPA, MMA and MIBK are over RMB 1,000/mt per mt. The profit of isopropanol shrinks. Some downstream users show resistance to high prices of acetone.   

On the whole, the demand for acetone will be flat in December, and the acetone market may slide. Players should focus on the buying interest. It is predicted that the Chinese acetone market will move marginally in December.