Bull Run for European Acetone Market, Supply Constraints and Expensive Feedstock to Blame
Bull Run for European Acetone Market, Supply Constraints and Expensive Feedstock to Blame

Bull Run for European Acetone Market, Supply Constraints and Expensive Feedstock to Blame

  • 11-Mar-2024 5:36 PM
  • Journalist: Francis Stokes

Karlsruhe- The European market continued to witness the bullish pricing dynamics under the influence of the limited supply and the unleashed prices of naphtha in the regional market. Further, benzene which is the major and the primary feedstock required for the production of Acetone witnessed the price hike steadily, reflecting the overall trend in the regional market due to a constrained supply. The growing price difference is a consequence of significant price hikes in downstream sectors like Acetone, personal care, and cosmetics, which are influenced by the limited availability of Acetone and the rapid rise in feedstock benzene prices. As of the week ending March 8th, Acetone prices in the market were recorded at USD 1380 per metric ton, free delivered to Karlsruhe, with a total variation of 5.3% weekly.

The pricing dynamics of Acetone in the domestic market are influenced by several factors, including the gap between demand and supply, as well as the energy costs associated with its production. Europe is set to finish the winter season with a historically high volume of gas in storage, leading futures prices to return to levels seen before the crisis when adjusted for inflation. This marks a significant shift from two years ago when concerns about potential gas shortages arose after Russia invaded Ukraine.

Acetone is a crucial component in the cosmetics and personal care sectors, which dominate the European market. Despite declining markets in China and the United States, French exports of perfumes and cosmetics have continued to grow substantially each year.

Adding to the given factors, the plant shutdown of the Acetone plant and the manufacturing units in the global market in different regions caused the limited supply inventories in the European market. Chang Chun Plastics Co., Ltd in Taiwan was under maintenance in March, LG Chemicals in South Korea and Zhejiang Petroleum and Chemicals Co., Ltd. in China were under the scheduled maintenance in the previous month and have now resumed operation to complete the pending domestic and international market demand of Acetone.

The CEO of Europe's largest container port stated that Rotterdam has sufficient space available due to a second year of weak demand and the depletion of retail inventories. This will enable the port to handle any increase in volume once ocean carriers resume regular transits through the Red Sea. Meanwhile, according to ChemAnalyst, Acetone prices in the European market are expected to remain optimistic towards the end of the first quarter of 2024, supported by enhanced productivity levels and a modest demand outlook.

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