Acetone Prices Surge as Tight Supply Meets Resurgent Demand in Paints Sector

Key Highlights

1. Acetone Prices Surge Amid Supply Constraints
   • Weekly rise of ₹3/kg due to demand-supply imbalance.
2. Resurgent Paints Sector Drives Demand
   • Domestic production at 12 kt/month; balance met via imports.
3. International Market Trends
   • WTI crude down 1.85% ($71.80/barrel), natural gas down 3.92%.
4. Expert Outlook: Prices Likely to Stay Firm
   • Supply constraints and rising demand to keep acetone prices elevated.

Acetone Prices Rise as Supply Tightens, Demand Rebounds

• Importers have raised acetone prices by ₹2/kg, setting the new price at ₹74/kg (Ex-Kandla) on 60-day credit terms. This upward revision is primarily driven by reduced imports and a decline in phenol production, as acetone is a byproduct of the cumene process. The resulting tight supply in the market has exerted upward pressure on acetone prices.  
• Trader offers were even higher today, with rates quoted at ₹74.50++ (Ex-Kandla) and ₹75.00++ (Ex-Dahej) on 60-day credit terms. On a week-on-week basis, acetone prices have risen by nearly ₹3/kg, fueled by increased demand and constrained supply.  

Paints Sector Fuels Acetone Demand, Prices Stay Firmy

• In January 2025, acetone and isopropanol (IPA) prices experienced corrections due to weak downstream demand. Key consumer sectors such as bulk drug manufacturing and paint production slowed down amid subdued market conditions. 
• However, from the last week of January 2025, demand from the paints and coatings sector has shown significant growth, driven by the resumption of seasonal demand.  
• India’s monthly acetone demand is estimated at 23-25 kt (kilotonnes). Domestic manufacturers, Deepak Phenolics and Hindustan Organic Chemicals Limited (HOCL), collectively contribute approximately 12 kt per month, with the remaining demand being met through imports.  

Global Feedstock Prices Stable; Acetone Market Remains Bullish

• On the international front, upstream crude oil and natural gas prices have exhibited mixed trends: 
  1. WTI Crude Oil: Decreased by 1.85% to $71.80/barrel.
  2. Natural Gas: Declined by 3.92% to $3.22/barrel.  
• Key feedstock prices have remained relatively stable:  
  1. FOB Korea Benzene: $895/mt (down $5).
  2. FOB Korea Propylene: $845/mt. 
• Downstream product prices indicate CFR China Acetone at $780/MT.

Expert Opinion: Buyers Advised to Stock Acetone Amid Expected Price Hikes

• Market trends indicate a bullish sentiment for acetone, driven by the resumption of seasonal demand from the paints and coatings sector. Buyers are advised to proactively plan their inventories to mitigate potential price hikes in the near term.
• The combination of tight supply and rising demand is expected to keep acetone prices firm in the coming