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→ ACETONE REPORT
An Analysis by Garrett Velarde
The MMA Settlement for August was unanimously settled at $0.325 per pound. This represents an increase of $0.0175 per pound from July’s settlement. Acetone profits at this time are now key for global producers with phenol demand weak. The prices for benzene and refinery grade propylene (RGP), the feedstocks associated with phenol and acetone, are relatively equal. Of course, cumene, the intermediate product before getting to phenol and acetone, requires more benzene than RGP. Also, more phenol than acetone is produced with one molecule of cumene. However, current market dynamics demand a higher price for acetone than phenol here in the USA. We will not bore you with plant economics here but let’s just say strong acetone sale prices are critical for producers.
The RGP movement for the latest 45-day volume weighted average was approximately $0.025 per pound higher compared to the previous 45-day volume weighted average. RGP pipeline trades have now reached $0.20 per pound. We have not seen values this high since November 2019. Polymer grade propylene (PGP) trades have not been climbing up the same way as RGP. PGP trades are flat to slightly down since our last report. The delta between RGP and PGP is approximately $0.13 per pound at this time.
The acetone supply and demand picture has not changed much since the last report. However, Mother Nature (the hurricanes devastating the east TX and west LA areas) decided to intervene on top of planned river closures. To pile on to these operational dynamics, one domestic producer is already on their 2 month planned turnaround and another producer is about to enter the same airspace. Methyl methacrylate (MMA) demand is still strong behind the need for the shields placed between the consumer and cash registrant at stores. We have heard PMMA (MMA derivative used for production of those shields) orders are backlogged all the way to 2021.
The domestic truck and rail acetone market still needs more to satisfy the USA appetite. Operational issues like river closures and destructed rail crossings are affecting delivery of acetone to distributors and consumers. Price increases to the tune of $0.04-0.05 per pound have been announced by at least 4 different parties. These increases are effective at different dates in September.
We predicted an increase from July to August. We are not as confident in seeing another increase from August to September, but we also don’t predict the car will be put in reverse. Therefore, we will call for relatively little movement in the settlement from August to September. We wish everyone a happy and healthy September!
ISSUE: SEPTEMBER 2020
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