After a mid-month fall, Acetone prices stabilize towards the end of March
- 01-Apr-2022 11:33 AM
- Journalist: Li Hua
Acetone prices have remained stable after facing a drop in the third week of March. The ongoing Russia-Ukraine war has caused the crude prices to fluctuate which led to a change in the petrochemical prices. Besides the ongoing war, the resurgence of COVID in China has also impacted the price of Acetone. Trade activities have been hampered due to the disruption caused by the lockdown restrictions in cities of China.
After facing a steep fall by the week ending 18th March, Acetone prices were stable in the last week of March due to the weakening of supply fundamentals caused by the ongoing Russia-Ukraine conflict and the recent resurgence in covid cases and the lockdown in Shenzhen and Shanghai. Acetone prices in China were observed to be USD 920/tonne CFR Qingdao by the week ending 25th March.
China being the major importer of Acetone from Southeast Asia and Far East Asia, the resurgence of COVID has led to severe restrictions affecting the import and export of the material in the Chinese market. Transportation has been severely hampered as Shanghai faces 9 days of lockdown hampering the normal passage of economic activities. Shanghai has been considered as the financial capital of China.
The balance of supply-demand dynamics of Acetone has declined in China due to the market closures and severe transport restrictions. The reduced consumption from China has affected the market dynamics in the global market. Another key factor at play has been a disruption in port activities as earlier Yantian port and now the port of Shanghai witnesses substantial decline in trading activities. On the demand side, the cleaning and pharmaceutical industry has increased consumption while demand from textile and other industries remain subdued as per the latest assessment.
Acetone is used as an upstream in the production of several key products including Bisphenol A, Isopropyl alcohol and Methyl methacrylate. Weak to stable demand from end-use industries due to the closure has impacted the prices of these materials. Acetone is produced from Benzene and Propylene which are the derivatives of crude oil. The crude derivatives have been facing significant inflationary pressure since the beginning of the European crisis which had an impact on Acetone prices.
According to ChemAnalyst, “Acetone prices might witness a rise in the upcoming weeks given the crude prices continue to rise owing to Russia-Ukraine war. An upsurge in crude prices is likely to affect the prices of the imported material as exporting countries are likely to face an overall increase in the cost of production. Speculations around diesel availability have also surfaced as Russia has curtailed diesel production which may impact freight and shipping industry as diesel is widely used in freight transport.”