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→ ACETONE REPORT
An Analysis by Garrett Velarde
The MMA Settlement for March was unanimously decided at $0.32 per pound. This represents a decrease of $0.0325 per pound from February’s settlement. Is the propylene market preparing to make a hot run up in the summer or will we continue to see lower MMA settlements from bearish propylene? Mirror mirror on the wall, why did propylene have to fall!?
The refinery grade propylene (RGP) movement for the latest 45-day volume weighted average was down approximately $0.03 per pound compared to the previous 45-day volume weighted average. Thus, a factor greater than 1 was reflected in the MMA settlement. The latest RGP trades have been slightly elevated from the levels seen last month. Additionally, the futures for polymer grade propylene (PGP) are all anywhere from $0.02-$0.06 per pound higher than current trade levels.
Acetone imports for Q1 2019 are down approximately 15% from Q1 2018. The expectation is Q2 will bring a low amount of imports into the USA behind the anti-dumping duties filed by three domestic producers. Importers are not likely to take a risk on what preliminary duties could be imposed if the International Trade Commission decides to move the investigation to the Department of Commerce. Further, the fire at Intercontinental Terminals (ITC) in mid-March has restricted any operations for the folks who store acetone at this terminal. Having said all this, acetone length appears to still be present. The demand side of the equation is the issue as major consumers (MMA manufacturers and acetone derivative manufacturers) are offline, on turnaround, or operating at reduced rates. Once these consumers are back up and running at good operating rates along with low imports, the domestic acetone landscape has the potential to tighten up quickly.
The domestic truck and rail market continues to show solid demand. This sector has certainly helped some in balancing the market with barge consumers struggling to keep their plants running. The competition remains fierce, as all spot pounds are fought for like a Rocky fight against Ivan Drago.
We predicted the March MMA contract price would be down slightly from February’s settlement. Eh, 9% down qualifies as slightly. We believe we’ve reached a bottom folks. We call for April’s settlement to increase slightly. We see Q2 in a more bullish light.
ISSUE: APRIL 2019
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