Asia acetone, phenol supply to tighten as sellers eye Europe market

04:03' PM - Monday, 05/11/2018

Asia’s spot acetone and phenol availability may diminish, as some suppliers were seeking discussions with Europe-based buyers.

There is a possibility that the arbitrage window from Asia to Europe would open, following a recent force majeure declared by INEOS Phenol in Germany and Belgium on 30 October.

Low water levels on the River Rhine, alongside outages at two of the company's external cumenesuppliers, have led to reduced production at its plants, according to a company source.

Acetone inventory levels in the key China market stood at 64,000 tonnes in the week ended 2 November, up by 11,000 tonnes or 20.8% week on week, and the highest recorded so far this year.

China’s acetone import prices have been sliding for the past three months because of long supply.

In the week ended 2 November, prices were assessed at $490-510 /tonne CFR (cost & freight) CMP (China Main Port), down by $10-30/tonne week on week, according to ICIS data.

With surplus acetone on hand, Asia-based suppliers were keen to export the extra volumes if margins in Europe rise higher than Asia’s.

Buying ideas in Europe were capped at $550/tonne FOB (free on board) NE (northeast) Asia. The freight cost from Europe to Asia stands at $100/tonne.

In the phenol market, prices in Asia were at a near four-year high but some suppliers are also seeking discussions with buyers in Europe, if netbacks were better.

In the week ended 2 November, spot phenol prices were assessed stable to softer from the previous week at $1,430-1,460/tonne CFR CMP, according to ICIS data.

Asia, however, has fewer phenol cargoes available for spot discussions since production is traditionally dedicated to contractual obligations, and amid ongoing plant turnarounds.

In China, Sinopec Yanshan’s No 2 line is shut from 27 October to 28 November; Chang Chun’s unit is undergoing maintenance from 1 October to mid-November; and Sinopec Gaoqiao’s plant is shut from 8 October to mid-November.

In South Korea, LG Chem’s Yeosu-based line is shut in November.

Taiwan Prosperity Chemical Corp (TPCC) is scheduled to shut its plant for a three-week maintenance from the second half of December.

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