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→ ACETONE REPORT
An Analysis by Garrett Velarde
The MMA Producer-Monthly Barge Contract for May settled at $0.41 per pound. This
respresents a $0.075 per pound decrease from April to May. The settlement has fallen
$0.1275 per pound over the last two months. Will there be 3 consecutive months of
decreases after 3 prior months of increases? You trendy dog, you acetone.
The refinery grade propylene (RGP) spot weighted average decreased approximately
$0.10 per pound from mid-month April to mid-month May. RGP currently rests at
roughly half its value from March pipeline deals. Towards the end of May, RGP strengthened a bit on
top of higher crude prices. However, RGP supply remains balanced to long. RGP is expected to stay
this way with better refinery utilization rates and the anticipated start-up of Enterprise
Product’s propane dehydrogenation (PDH) unit within the next couple months. Polymer grade propylene
(PGP) is currently at a $0.13 per pound premium to RGP. We are accustomed to seeing a $0.10 per
Domestic acetone supply and demand are both adequate. Phenol operating rates have started to pick
up and are estimated to be operating right around 80%. One methyl methacrylate (MMA) producer was
on a planned turnaround in May, but is rumored to be up and running now. Bisphenol-A (BPA) demand
is steady. The global sentiment of acetone is a hard one to judge. China Main Port (CMP) acetone
plus duty and freight can get to the USA at approximately $0.37 per pound. Recently, Asian
propylene has been on the rise due to unit shutdowns and higher crude oil prices. This should
encourage Asian acetone producers to keep the material on that side of the world. Europe remains in a state of flux. Asian imports into Europe have had logistical issues getting to MMA producers as well to the truck and rail market. This leaves Europeean pricing in a wide range.
Acetone pricing in Europe is posted around $0.50 per pound.
Domestic truck and rail buyers appear off the bench and in the game. With the stabilization of RGP,buyers feel more comfortable restocking their inventories. The Distribution Buyer has once again softened. The May 1st range was $0.53-0.58 per pound; the mid-May range was $0.49-0.55 per pound;
the June 1st range came in at.48-0.53 per pound. Spot acetone pounds are easier to come by than last month.
With the first three months of trade data available now, imports were down approximatley 3.5 million pounds from Q1 2016 to Q1 2017. This is an improvement from last month when only after 2 months of trade data available the USA had lost roughly 10 million pounds in imports from 2016 to
2017. On the other hand,an additional 14.5 million pounds have been exported in Q1 2017 versus Q1 2016.
The author of this monthly update predicted May’s settlement between $0.39-0.42 per pound. A win but we have been criticized for having too big of a window. For June’s settlement we will tighten it up some and predict a settlement between $0.375-0.395 per pound. Acetone will lose a tiny bit of margin to RGP.
ISSUE: JUNE 2017
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