The acetone settlement for August was concluded at $0.5725 per pound. Measured against the $0.5925 average of July’s split settlement, that is a decrease of $0.02 per pound. We called for a decline of at least $0.015, so the direction was right and the feedstock/market dynamics took it a half cent further.
Propylene keeps leaking. The refinery grade propylene (RGP) market is still without trades. Polymer grade propylene (PGP) has continued to slide and is now trading in the high thirties, roughly three cents below where it sat at our last writing. Supply is no issue. Every propane dehydrogenation (PDH) unit is up and running, including Dow’s, which was down through the middle of August. Full PDH operation paired with soft derivative demand keeps the weight firmly on the downside.
Imports are where August got loud. US acetone imports came in at 12,400 MT, up from July’s 2,300 MT. Bulk parcels landed from both Europe and Asia. Keep in mind these cargoes were booked months ago when the arb was still penciled out, so the August number reflects June and July economics rather than where things stand today. Firmer Asian pricing lately has shut their window to the USA. If imports are to arrive for the remainder of the year, Europe will most undoubtedly be the culprit.
Domestically, there have still been no acetone price increase announcements since April, and it is difficult to build a case for one. Phenol demand is still mute, which means less acetone pounds available. However, acetone demand is not particularly strong. Benzene held nearly all last month’s spike, with the contract settling at $4.565 per gallon in September against $4.585 per gallon in August. Crude oil and benzene are going in the same direction. This isn’t doing any favors for phenol demand.
We called for a decrease of at least $0.015 per pound in the August settlement. For September, there is just as much bearish pressure. PGP is down another three cents, every PDH unit is running, demand is unchanged in the wrong direction, and plenty of imports just hit our shores. We are calling for a decrease of at least $0.015 per pound. On the bright side, the football games now count, the Gulf hasn’t seen a terrible storm this year, and there is a real chance of a sub 90 degree day in Houston soon. Just kidding on the last point.