Acetone Prices Slump as Naphtha and Benzene Futures Decline

Chemical Price

• Importers have reduced Acetone prices by ₹1/kg to ₹88++ Ex-Kandla and ₹90++ Ex-Mumbai, on 60 days credit terms. In the South, importers are offering Acetone at ₹94.25++ Ex-Vizag and ₹96.50++ Ex-Chennai, also on 60 days credit terms.

• Traders' offers are noted at ₹88++ Ex-Kandla and ₹89++ Ex-Dahej on advance payment terms.

• Since 1st August 2024, Acetone prices have dropped nearly 10%, driven by weak downstream demand and cheaper import costs, leading to a market correction.

• Falling future contracts of upstream Naphtha and feedstock Benzene prices have created bearish sentiment for Acetone in the international market.

• Future Contract Prices of Naphtha and Benzene

• Naphtha CFR Japan

• Sep 1H: $657 (Down $18)

• Sep 2H: $656 (Down $17)

• Oct 1H: $653 (Down $14)

• Oct 2H: $652 (Down $15)

• Nov 1H: $647 (Down $14)

• Nov 2H: $646 (Down $14)

• Benzene FOB Korea

• Sep 1H: $978 (Down $34)

• Sep 2H: $977 (Down $35)

• Oct 1H: $962 (Down $30)

• Oct 2H: $961 (Down $31)

• Nov 1H: $950 (Down $30)

• Nov 2H: $951 (Down $31)

Chemical Demand and Supply

• In August, Acetone prices rose due to short supply and strong demand from bulk drug manufacturers. However, demand for Di Acetone Alcohol (DAA) significantly decreased as paint manufacturers reduced production during the monsoon season.
• Heavy rainfall in Gujarat and floods in Andhra Pradesh further affected demand, as production rates of many manufacturers in these regions were impacted.
• With continuous vessel arrivals and cheaper replacement costs, combined with declining Asian benchmark CFR China Acetone prices, bearish sentiments are expected to persist in the short term. India's Acetone demand is approximately 23-25 kt per month. HOCL and Deepak Phenolics have a combined production capacity of 12 kt per month, with the remaining 11-12 kt being imported.
• Major consumers include manufacturers of bulk drugs, paints, coatings, DAA, IPA, Bisphenol A, and MMA.

Chemical News

• In the international market, upstream crude oil benchmark WTI prices increased by 0.43% to $69.44/barrel. CFR Japan Naphtha prices were at $639/MT, and feedstock FOB Korea Benzene was at $975/MT.

Expert Opinion

Acetone prices are expected to remain bearish this week due to weak downstream demand, lower replacement costs, and price corrections in feedstock prices. Bulk buyers are advised to exercise caution when building inventory.