Acetone Prices In The United States Are Likely To Be Balanced And In The Range Of USD 760-870 Per Tonne During Q1 Of 2023

Prices For Acetone in The U.S. Stay Sluggish on The Back of Frail Demand and Disruptions in Supply.

Prices for acetone have persisted in decreasing in the United States since the start of mid-October 2022. According to the recent data, prices of acetone in the U.S. lingered at USD 740/M.T. at the start of December 2022 after experiencing a cut of 1.3 percent in the costs last week.

The main reason behind this is an increase in the levels of inventory of domestic acetone because of a drop in offtakes and exports amidst disruptions in the supply chain owing to low levels of water in the Mississippi and Ohio rivers. The water levels in the Mississippi River lowered significantly during October 2022 and stayed at the bottom up until November, impacting the shipping and exports of the materials.

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During the same time, prices of upstream Brent crude oil plummeted in December 2022, settling at USD 86.41 USD/barrel as opposed to its prior prices at USD 92.4 USD/barrel, which adversely affected the prices of feedstock Propylene and Benzene as well as the production costs of acetone.

In the U.S., just the price of acetone dropped by 12 percent in November 2022. At the same time, a drop in costs of production because of the consistent decrease in prices of feedstock Propylene adversely affected the upstream cost support.

The costs of production were also impacted because of the fluctuations in prices of benzene due to a drop in demand from the producers of Aerosol and dry shampoo, which led to a reduction in the upstream cost pressure on acetone. Simultaneously, the product’s demand lowered from downstream Bisphenol A and Methyl Methacrylate producers due to insufficient orders from the automotive and packaging sector.

Meanwhile, the prices of acetone plunged in the Asian region due to lower orders from downstream industries. In contrast, the prices for the commodity stayed elevated in the European region owing to increased upstream costs and production prices amidst modest levels of inventory and no major consumption from the downstream industries.

According to analysts, the present market sentiments for the commodity will likely continue in the U.S., and prices will likely stay moderately low as the West gets ready for the holiday season. No significant improvement in orders is expected from the local purchasers and importers till the year-end.

Other Factors Impacting Acetone Prices

The prices for acetone will likely stay unaffected by high volatility in the prices of phenol, which will lead to negligible fluctuations. Nevertheless, more increased capacity utilisation of phenol plants will help evade some outer stress as well as threats linked with the entrenched Europe energy crisis along with challenges in operations that are ramping up newer product capacities and cannot be undermined.

The domestic production of U.S. phenol and acetone has declined on the back of many factors since 2017; these include more imports of derivative products, epoxy resins and polycarbonate (P.C.) owing to the capacity expansions in Asia, producers of phenolic resin utilising lesser phenol in formulations and sluggish financial growth in the U.S.

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As per Procurement Resource, the prices of acetone in the U.S. will stay sluggish due to supply chain disruptions. The leading cause of the dip in prices is an increase in the levels of inventory of domestic acetone because of a drop in offtakes and exports amidst disruptions in the supply chain owing to low levels of water in the Mississippi and Ohio rivers. Furthermore, the prices of acetone plunged in Asia due to lower orders from downstream industries.

Additionally, prices for acetone will likely stay unaffected by high volatility in the prices of phenol, which will lead to negligible fluctuations. The domestic production of U.S. phenol and acetone remains low due to factors like more imports of derivative products, epoxy resins and polycarbonate (P.C.) owing to the capacity expansions in Asia, producers of phenolic resin utilising lesser phenol in formulations as well as bearish financial growth in the U.S.