ACETONE MARKET REPORT January - SUMMARY
January 31, 2008 Issue: 98
CMAI - HOUSTON Adrian Beale/Marc Laughlin Tel: 281-531-4660
[email protected] [email protected]
Prices for Period Ending: 2H-January
Cents/Lb.
United States
Large Buyer (1, 3, 6) Q4 2007 Small-Medium Buyer (1, 2, 6) 2H January Export, USGC (5)
West Europe, ($1.478/Euro) Large Buyer (1, 3, 6) Distribution Market (1, 2, 6) Export, ARA (5)
CMAI - EUROPE Alex Lidback/Brian Cooke Tel: 44-207-930-9818
CONTRACT $/Ton
€/Ton
Cents/Lb.
47.50 55.00
-
47.50 60.00
1047.2 - 1047.2 1212.5 - 1322.8
708 820
-
708 895
62.4 45.9
-
62.4 48.6
1374.7 - 1374.7 1012.6 - 1071.7
930 685
-
930 725
42.00 - 44.00
China, Domestic (1), (RMB7.191/US$) China, Domestic (Import Equivalent) China, Main Port (4)
PROPYLENE INDICES (Acetone*/Propylene) Refinery (Spot) Chemical (Spot) Polymer (Spot)
*Large Buyer Price
United States
Contract 0.85 1.01 0.79
Export 0.75 0.89 0.70
©Copyright CMAI 2008 All Rights Reserved
[email protected] [email protected]
Asia
(e.g. 20.0 cpp acetone/15.0 cpp propylene = 1.33)
CMAI - SINGAPORE Tel: 65-6-226-5363
West Europe
Contract
Distribution
1.17 1.07
0.86 0.79
SPOT
$/Ton
925.9
-
970.0
»
-
900.0
n»
37.9
-
40.8
835.0
59.0 46.2 44.9
-
59.4 46.6 45.8
1300.2 - 1310.6 1019.6 - 1028.0 990.0 - 1010.0
Asia
China 0.73 0.78
» » »
NEA #N/A #N/A
SPOT TRADE PRESSURE CALCULATION (positive values suggest profit incentive to move product)
Pricing Notes
all units are $/ton to: United States West Europe Asia
United States
from:
Freight
Pressure
105 120
-185 -68
West Europe
Freight 85
Pressure -99
110
23
Asia
Freight Pressure 115 -262 110 -243
Not settled, previous or quarterly price posted All Prices are FOB Unless Notes Indicate Otherwise.
Changes from last report « prices moved lower » prices moved higher - prices are unchanged
n - Notional price range, no transactions
Price Range Covers From First Day of Month Through This Report's Date. Prices Are For The Current Month Unless Noted. (1) Delivered or minimum freight allowed (3) Barge delivery (2) Truck/Rail delivery (4) CFR
(5) FOB (6) Excludes Discounts
QUARTERLY PRICE FORECAST Current Prices
United States
2009
Qtr-3
Qtr-4
Qtr-1
Large Buyer (1, 3, 6) cents per pound Small-Medium Buyer (1, 2, 6) cents per pound ratio to propylene, refinery spot ratio to propylene, chemical CP
47.50 55.00 0.9 1.0
-
47.50 60.00
50.00 55.75 0.92 0.84
49.00 54.75 0.98 0.89
46.00 51.75 0.98 0.89
49.67 55.42 1.10 1.00
Large Buyer (1, 3, 6) Euro per ton Distribution Market (1, 2, 6) Euro per ton ratio to propylene, chemical spot ratio to propylene, polymer CP Exchange Rate US$ per Euro
930 685 1.0 0.8 1.48
-
930 725
960 737 1.06 1.03 1.47
905 703 1.03 0.99 1.46
855 664 1.04 1.01 1.43
815 640 1.06 1.02 1.40
China, Main Port (4) US$ per ton ratio to propylene, polymer spot
990 0.8
-
1010
990 0.78
843 0.76
770 0.75
760 0.76
West Europe
Asia
2008
Qtr-2
The forecasts are the opinion of the ACMR and based solely on information in the public sector and assessments of CMAI. There is no guarantee as to their use.
This report is for the exclusive use of the client company. Distribution outside of the client company is strictly prohibited without the prior written consent of Chemical Market Associates, Inc. (CMAI). The prices presented herein are strictly the opinion of CMAI and are based on information collected within the public sector and on assessments by CMAI staff. CMAI MAKES NO GUARANTEE OR WARRANTY AND ASSUMES NO LIABILITY AS TO THEIR USE.
Acetone Market Report UNITED STATES The large buyer contract discussions for Q1 2008 are off a slow start with no real price discussion range in the public domain. A few operational issues on both sides of the table have not been helping the matter. As mentioned in previous reports, a major phenol/ acetone producer had experienced operational issues after their planned maintenance outage of 3 weeks that led to them taking another unplanned outage of approximately 7 days. Now a major buyer is experiencing issues at one of its facilities; this just ahead of their planned 20 day maintenance outage in February. It is our understanding that this major acetone buyer has reduced their acetone consumption so far for January and February by a total of approximately 6,000 metric tons. A major phenol/acetone producer is still planning to go forward with private and confidential monthly contract pricing in the larger buyer market segment; however, no large buyer has confirmed that they have agreed to this and clearly there is some resistance. We will monitor the situation closely and comment on it as it becomes clearer.
U.S. Acetone Raw Materials
Cents Per Pound 70 60 50 40 30 20 10 0 Jan-02
Jan-03
Jan-04
Jan-05
Large Buyer CP Chem Propylene, CP
Jan-06
Jan-07
Jan-08
Refinery Propylene, Spot
~
U.S. Acetone to Propylene Ratio Ratio 1.8 1.6 1.4 1.2 1.0 0.8 0.6 Acetone/Spot Refinery Grade Propylene 0.4 Q1-02
Q1-03
Q1-04
Q1-05
Q1-06
Q1-07
Q1-08
~
The small to medium buyer market has continued to diverge. We are seeing a bit of price softening from the beginning of the month with some producers reducing their January 1st price increase mid month and there is some competitively priced material in a few spots throughout the country around 55 cents per pound. It should be noted that a few producers are keeping their prices firm on the upper end of the range of 58-60 cents per pound. Supplies are understood to be readily available and for some demand seems to be a bit weaker than this time last year while others are experiencing better business than they had expected.
Acetone Delivered
U.S. Small-Medium Buyer Market Price History
cts/lb US$/MT
1H-December 55.00 58.00 1213 1279
January 31, 2008/Issue No. 98
2H-December 56.00 60.00 1235 1323
Page 2
1H-January 56.00 60.00 1235 1323
2H-January 55.00 60.00 1213 1323
Acetone Market Report On trade, we continue to see weak imports and decent exports. The per month average imports for the months of January thru November (the latest trade data available) for 2005, 2006 and 2007 are 6.2, 3.7 and 3.4 metric tons, respectively. In likewise fashion, exports for those years are 27.4, 23.5 and 25.6 metric tons, again respectively.
West Europe Acetone and Propylene Ratio Euro per Ton 1000
Ratio 1.6
900
1.5
800 1.4
700 600
Forecast
500
EUROPE
1.2
400
There has been little to no progress on the first quarter acetone price settlement. The two sides remain very far apart and it appears that negotiations will continue to linger well into the first quarter. As you may recall, producers would like to increase prices in conjunction with the €57 per ton increase for the Q1 propylene price. Buyers, conversely, would like to press for a rollover to only a marginal increase - hence, the stalemate. Both sides are adamant about their position. Let’s start with the production side. Producers have struggled to keep pace with propylene throughout 2007, despite all the acetone outages, which has made acetone’s contribution detrimental to the phenol/acetone business. Depending on where negotiations settle out in the first quarter, the industry is looking at one of the lowest, if not the lowest acetone to propylene ratio in history. Please consider that is based on applying a net price assuming known discounts on the quarterly price which tend to be quite generous.
1.3
300
1.1
200 100 0 Jan-02
Ratio Acetone to Poly C3
1.0
Large Buyer
0.9 Jan-03
Jan-04
Jan-05
Jan-06
Jan-07
Jan-08
~
Ratio Acetone to Propylene 1.8 1.6 1.4 1.2 1.0 0.8 0.6 0.4
U.S. Large Buyer Europe Large Buyer NE Asia
0.2 0.0 Jan-02
Jan-03
Jan-04
Jan-05
Jan-06
Jan-07
Jan-08
~
The buy side position, on the other hand, is pushing for little to no increase. They point to various dynamics. The spot price has shown little change relative to December partly because demand in January has yet to show the full seasonal upswing. In addition, MMA producers are trying to increase Q1 prices and they are struggling to do so. Therefore, they are pushing back because of the large increase they absorbed because of methanol. Yes, producers say that has nothing to do with acetone but it has created a large incentive to push back where possible. Furthermore, buyers feel that time is on their side as more capacity is scheduled to come on line in
Acetone Delivered Exchange rate:
West Europe Distribution Market Price History
cts/lb €/Ton
1H-December 44.5 47.1 680 720 $1.443/Euro
January 31, 2008/Issue No. 98
2H-December 45.5 48.1 680 720 $1.474/Euro
Page 3
1H-January 45.9 48.6 680 720 $1.488/Euro
2H-January 45.9 48.6 685 725 $1.478/Euro
Acetone Market Report the first quarter (see below) suggesting there is little incentive to settle early. One of the questions arising from such a stalemate is how to handle invoicing? What are the alternative mechanisms in contracts? All of these issues are being closely analyzed. In operational news, earlier in the month Ineos Phenol successfully started its number one unit at Antwerp. The second unit, which recently was scheduled to restart on January 21, has been pushed back to sometime in the middle of February. As you may recall, the second unit will come on stream with an additional 130,000 tons of acetone capacity which is a reason why some buyers feel time is on their side. This will clearly help their balances but they will begin efforts to prepare for their turnaround in April at Gladbeck. At this point, there have been no announced changes to the force majeure and the sales allocation of 70 per cent of previous volumes remains in place.
Regional Acetone Prices
Dollars per Ton 1,600 1,400
U.S. Large Buyer Europe Large Buyer NE Asia
1,200 1,000 800 600 400 200 0 Jan-02
Jan-03
Jan-04
Jan-05
Jan-06
Jan-07
Jan-08
~
China Acetone vs Propylene Dollars Per Metric Ton 1400 1200 1000 800
In the distribution market, demand has started the New Year fairly slowly making it difficult 600 to raise prices. Consequently and as noted 400 above, increases have been marginal, on average, around €5 per ton to €685-€725 per ton 200 delivered. Within this range, the lower prices have generally been for direct producer-to0 Jan-00 Jan-01 Jan-02 Jan-03 Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 consumer deliveries. Most distributor busiPG Propylene NEA Spot Acetone CFR China ~ ness has been at the higher end of the range delivered Germany or France. At the end of the day, demand needs to improve to see more upward price pressure. One should expect sellers to be even more aggressive as in their eyes they have catching up to do on margins as they absorbed the entire propylene increase with only minimal increases for acetone. Europe’s acetone export market is rather difficult these days as prices in Asia have been rather stable and low. In addition, the market has been quiet. The effect from this is that the netbacks are very, very low and not attractive to sellers. Therefore, the spot market is fairly quiet.
Acetone CFR China
cts/lb US$/MT n = notional posting
9-Jan-08 43.54 44.45 960 980
January 31, 2008/Issue No. 98
China Price History n n
43.54 960
16-Jan-08 45.36 1000
Page 4
44.45 980
23-Jan-08 45.36 1000
n n
45.36 1000
30-Jan-08 46.27 1020
Acetone Market Report ASIA Aided by the increases in import prices, domestic sellers continued with their efforts to keep their price levels up. Lower market inventories are also helping. On the other hand, Chinese demand remains gloomy due to more extensive shutdowns taking place in the derivative sectors ahead of the Lunar New Year holidays. In East China, the mainstream spot transactions improved slightly to RMB9,350-RMB9,450 per ton depending on location. Current notional spot prices are estimated in a range of $1,000-$1,030 per ton CFR. FORECAST U.S. Price Forecast Concerning acetone demand, a major MMA producer has a turnaround scheduled for approximately 20 days in February at one of its units; however they are currently experiencing operational issues. In the near term we expect that acetone prices will remain flat due to feedstock costs, but offset a bit by the aforementioned demand dynamics. Further out we expect acetone prices to decline due to a more well supplied global acetone market. In January, CMAI began reporting a new propylene marker entitled “Refinery Grade Propylene Weighted Average Acquisition”, following the demise of the Refinery Grade Propylene (RGP) contract price. This price is the weighted combination of spot and contract RGP transactions for the current month. The CMAI 1st half January Weighted Average Acquisition price for RGP is 56.64 cents per pound. As previously advised, for January we will still use the start-month spot weighted average RGP price for our cumene contract price, but we will consider which RGP price to use in future calculations based on how the industry adopts the new marker prices. European Price Forecast CMAI’s price forecast for acetone contract prices in Europe is based on our forecasts for propylene price developments. Therefore our forecast calls for gross acetone contract prices to roughly follow propylene price developments over time. However, it appears acetone prices in the first quarter will separate themselves from propylene to historical levels, on the low end. Obviously this is not good news for producers but it shows the global glut of acetone. Our forecast calls for net acetone prices be slightly under 80 percent of the value of propylene for the near future. Please note that CMAI is applying a heavily discounted acetone price to correctly represent market conditions. We expect this ratio to hover around this level in the near term and we believe it will remain slightly under 80 percent due to global length and as new capacity enters the market. The possibility exists for it to fall further if propylene prices rise and domestic and export phenol demand is exceptionally strong. It will be interesting if phenol exports are strong but sellers are reluctant to ramp up rates due to the acetone market. From a phenol producer’s point of view, acetone has been the culprit for the poor margins despite a tightly balanced phenol market. It is worth noting that efforts to increase phenol prices relative to benzene to help overall profitability have seen some success. There are players in the acetone market who would like to see the current acetone pricing structure completely overhauled as discounts have grown dramatically in recent years creating a disparity between gross and net contract levels. This suggests that a possible rebasing may be launched by a player but at this point there is no clear indication whether this will be tackled soon. CMAI is considering all avenues to better reflect the market in the coming months and we would welcome your comments.
January 31, 2008/Issue No. 98
Page 5
Acetone Market Report Company UNITED STATES
Dow
Eastman Georgia Gulf Goodyear Ineos Phenol JLM Industries Lyondell MtVernon Phenol Shell Chemical Sunoco
Location
Process
Capacity
Institute Oyster Creek Kingsport Plaquemine Bayport Mobile Blue Island Bayport Mount Vernon Deer Park Deer Park Frankford Frankford Haverhill Haverhill
IPA dehydro Phenol co-product Other Phenol co-product Other Phenol co-product Phenol co-product Other Phenol co-product Phenol co-product Phenol co-product Phenol co-product Phenol co-product Phenol co-product Phenol co-product
Total U.S.
North American Capacity
Jan
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
77 183 11 141 7 335 28 30 217 162 210 220 127 78 109 1,935
3 3 4 10
-
6 4 10
-
-
-
-
-
-
1 1
-
-
1,935
164
153
164
159
164
159
164
164
159
164
159
164
20
10
-
10
-
-
-
-
-
-
1
-
-
1.0%
6%
0%
6%
0%
0%
0%
0%
0%
0%
0%
0%
0%
North American Capacity Lost North American Capacity Lost: Others/Estimates North American % Capacity Lost Where necessary CMAI has estimated operations.
Company Belgium
Ineos Phenol
Capacities are prorated for new plants/expansions.
2008 West Europe Acetone Operating Schedule (000 Metric Tons) Annual Capacity
Location
Process
Capacity
Antwerp Antwerp
Phenol co-product Phenol co-product
Finland
Porvoo
France
NOVACAP
Roussillon Roussillon
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
146 265 411
4 15 19
-
-
-
-
-
-
-
-
-
-
-
Phenol co-product
118 118
-
-
-
-
-
-
-
-
-
-
-
-
Phenol co-product Phenol co-product
78 19 97
-
-
-
-
-
-
-
2 1 3
-
-
-
-
Phenol co-product Phenol co-product Phenol co-product
47 47 409 503
-
-
-
34 34
-
-
-
-
-
-
-
-
Phenol co-product Phenol co-product
186 112 298
-
-
-
-
-
-
-
-
-
-
-
-
IPA dehydro
150 150
-
-
-
-
-
-
-
-
-
-
-
-
Phenol co-product Phenol co-product Phenol co-product IPA dehydro
130 99 125 9 363
-
-
-
-
-
-
-
-
-
-
-
-
Total France
Germany
DOMO Chemicals Leuna Leuna Ineos Phenol Gladbeck Total Germany
Italy
Polimeri Europa Syndial Total Italy
Mantova Porto Torres
Netherlands
Shell Chem Neth Pernis Total Netherlands
Spain
Ertisa
IQA Total Spain
Huelva, HL Huelva, HL Huelva, HL Tarragona, TG
Revised: January 28, 2008
Jan
Total Belgium Borealis Poly Total Finland
Revised: January 31, 2008
2008 United States Acetone Operating Schedule (000 Metric Tons) Annual Capacity
United Kingdom
Total United Kingdom
West Europe Capacity West Europe Lost West Europe % Capacity Lost Where necessary CMAI has estimated operations.
-
-
-
-
-
-
-
-
-
-
-
-
-
1,940
164
154
164
159
164
159
164
164
159
164
159
164
19 12%
0%
0%
34 21%
0%
0%
0%
3 2%
0%
0%
0%
0%
56 2.9%
Capacities are prorated for new plants/expansions.
January 31, 2008/Issue No. 98
Page 6
~
Acetone Market Report Company
Location
Process
2008 Asia Acetone Operating Schedule (000 Metric Tons) Annual Capacity Capacity
Jan
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
75 47 77 5 78 22 24 3 31 62 122
-
-
-
-
-
-
-
-
-
-
-
-
Phenol co-product Phenol co-product Phenol co-product Phenol co-product Other
143 155 118 124 12 552
-
-
12 12
2 2
4 4
13 10 23
2 2
-
-
-
10 10
2 2
Phenol co-product Phenol co-product Phenol co-product Phenol co-product
62 19 120 123 324
-
-
-
-
-
9 9
-
-
-
-
-
-
Kaohsiung, Phenol co-product Mai Liao, Phenol co-product Mai Liao, Phenol co-product Lin Yuan, Kaohsiun IPA dehydro Lin Yuan, Kaohsiun Phenol co-product
124 124 124 30 138 540
-
-
10 10 20
3 3 7
-
-
-
-
-
-
-
-
Pulau Sakra,
186 186
-
-
-
-
-
11 11
-
-
-
-
-
-
CHINA
Blue Star Jilin Chemical Kingboard Shanghai Pac Sinopec Gao Qiao
Harbin, Heilong. Phenol co-product Jilin, Jilin Phenol co-product Huizhou, GuangdonPhenol co-product Caojing, Shanghai Other Caojing, Shanghai Phenol co-product Gaoqiao, Shanghai Phenol co-product Gaoqiao, Shanghai Phenol co-product Tongliao Chemical Shanghai, ShanghaOther Yanshan PC Fangshan, Beijing Phenol co-product Fangshan, Beijing Phenol co-product Total China
JAPAN
Chiba Phenol Chiba, Mitsub. Chemical Kashima, Mitsui Chemicals Chiba, Sakai, Sumitomo Chem. Oita, Total Japan
KOREA
Kumho P&B LG Chemical Total Korea
TAIWAN
Chang Chun PC FCFC Lee Chang Yung Tai Prosperity Total Taiwan
SINGAPORE
Mitsui Phenols Total Singapore
Revised: January 28, 2008
Yeosu, Yeosu, Yeosu, Yeosu,
Phenol co-product
168
157
168
162
168
162
176
186
180
186
180
186
ASIA Capacity Lost
ASIA Capacity
101
-
-
32
9
4
43
2
-
-
-
10
2
ASIA Capacity Lost: Others/Estimates ASIA % Capacity Lost
4.9%
0%
0%
19%
5%
3%
26%
1%
0%
0%
0%
5%
1%
Where necessary CMAI has estimated operations.
2,079
Capacities are prorated for new plants/expansions.
January 31, 2008/Issue No. 98
Page 7
