Acetone Market Turns Bearish as Domestic Run Rates Improve and Imports Rise

Key Highlights:

• Price Decline: Acetone down ₹3/kg; offers range from ₹66–68/kg across regions
• Supply Surge: High domestic run rates + July import cargoes = oversupplied market 
• Demand Dip: Off-season for coatings and poor DAA/IPA offtake pressure prices
• Pharma Hope: July–August API demand may provide partial price support

Price Movement: ₹3/kg Drop Across Major Ports

• Acetone prices declined by ₹3/kg this week, as supply surged and downstream demand remained weak.
• Importers quoted fresh offers at:
  a. ₹67.00++/kg ex-Kandla
  b. ₹67.50++/kg ex-Mumbai (on 60-day credit terms)
• Domestic producer Deepak Phenolics offered material at ₹66++/kg ex-Dahej, on advance payment terms.
• Trader offers were mixed but generally lower, ranging between ₹67–68++/kg ex-Kandla on 60-day credit.
• The price correction is mainly attributed to increased supply. Both Deepak Phenolics and HOCL are operating at healthy run rates, and several import cargoes are scheduled to arrive in July 2025, adding to domestic availability.
• Additionally, bearish trends in feedstocks like benzene and propylene are driving a negative sentiment across Asian acetone markets.
• FOB Korea Benzene Futures:
  a. 1H July 2025: $715/MT (↓ $13 week-on-week)
  b. 2H July 2025: $715/MT (↓ $13 week-on-week)
  c. 1H Aug 2025: $713/MT (↓ $10 week-on-week)
  d. 2H Aug 2025: $713/MT (↓ $10 week-on-week)

Supply & Demand: Production Ramps Up, Imports Add to Surplus

• Acetone supply was tight from May to mid-June, as both domestic production and import arrivals remained limited. Geopolitical instability during the Iran–Israel conflict further contributed to the sharp price spike during that period.
• However, from the second half of June, supply conditions improved. Domestic manufacturers ramped up production, and higher imports led to a surplus market situation by early July.
• Demand from the paints and coatings segment has dropped due to the off-season. Similarly, downstream demand from Diacetone Alcohol (DAA) and Isopropanol (IPA) has weakened due to poor offtake dynamics. 
• On a positive note, pharma demand is expected to pick up in July and August, as API manufacturers have lined up strong production schedules, according to a market participant.
• India's monthly acetone consumption is estimated at 23–25 kt, with a domestic production capacity of around 12 kt/month, jointly contributed by Deepak Phenolics and HOCL. The remaining ~10 kt is typically met through imports.

Market News: Benzene and Propylene Continue to Soften

• In international markets, crude oil prices edged higher by 0.38% to $67.08 per barrel, while natural gas prices declined by 1.38% to $3.39/MMBtu.
• Feedstock Price Trends: 
  a. FOB Korea Benzene: $715/ton
  b. FOB Korea Propylene: $790/ton
  c. CFR China Acetone: $650/ton

Expert Opinion: Market Outlook: Stay Lean, Avoid Stocking Up

• Experts projects a bearish outlook for acetone prices in the near term, driven by rising supply and weak demand from major downstream sectors. The market now leans heavily on expected demand from the bulk drug segment, which may offer partial support.
• Additionally, continued weakness in feedstock prices is likely to exert further downward pressure.
• Recommendation: Buyers are advised to adopt a Just-in-Time procurement approach, and avoid inventory building in the current supply-heavy market.