Deepak Phenolics Shutdown Speculation, Rising Imports Weigh on Acetone Market

Key Highlights:

• Acetone prices drop ₹2/kg amid high imports and poor demand 
• Downstream sectors like pharma and coatings report weak offtake 
• Feedstock benzene and propylene see bearish price trend
• Buyers advised to avoid stocking; market remains oversupplied

Prices: Acetone Prices Dip by ₹2/kg

• Acetone prices dropped by ₹2/kg this week, weighed down by sluggish downstream demand and rising import availability.
• Fresh offers from importers were quoted at:
  a. ₹61.00++/kg ex-Kandla
  b. ₹61.50++/kg ex-Mumbai (60-day credit)
• Domestic producer Deepak Phenolics offered material at ₹62++/kg ex-Dahej on advance payment terms.
• Trader offers were seen in the range of ₹62–63++/kg ex-Kandla on 60–90 day credit, reflecting mixed sentiments.
• The price decline is largely driven by increased volumes of imported cargoes and weak demand from key downstream sectors. 
• Market talk suggests that Deepak Phenolics may undergo a three-day shutdown, while HOCL continues to operate at healthy capacity utilization. Several import shipments are also expected to land in August 2025.
• Further downward pressure is coming from bearish trends in upstream benzene and propylene prices across the broader Asian market.

FOB Korea Benzene Futures:

a. 1H Aug 2025: $738/MT (↓ $11 week-on-week)

b. 2H Aug 2025: $738/MT (↓ $11 week-on-week)

c. 1H Sep 2025: $736/MT (↓ $10 week-on-week)

d. 2H Sep 2025: $736/MT (↓ $10 week-on-week)

Demand Weakens Across Pharma, IPA & Coatings Sectors

• Acetone supply remained healthy through July, supported by steady domestic output and robust imports.
• However, demand weakened notably. The paints and coatings sector saw reduced consumption due to seasonal slowdown. Demand from Diacetone Alcohol (DAA) and Isopropanol (IPA) producers also declined amid weak offtake.
• The pharmaceutical segment, which is a key end-use sector, failed to support the market. API and bulk drug manufacturers reported lower-than-expected production volumes for August.
• India’s monthly acetone demand is estimated at 23–25 kt. Domestic production stands at around 12 kt/month, shared between Deepak Phenolics and HOCL, with the remaining ~10 kt met through imports.
• Geopolitical tensions continue to impact global trade flows, with US-led retaliatory tariffs causing uncertainty. Additionally, OPEC's recent decision to raise crude oil output from September 2025 has added to bearish sentiment in the aromatics complex.

Market News: Global Energy Weakness Adds Pressure

In global energy markets:

• Crude oil prices dropped by 1.68% to $66.19/bbl
• Natural gas prices slipped by 0.89% to $3.05/MMBtu

Feedstock Price Trends:

• FOB Korea Benzene: $738/tonne
• FOB Korea Propylene: $790/tonne
• CFR China Acetone: $565/tonne

Experts Recommends Just-in-Time Buying in Oversupplied Market

• Expert expects acetone prices to remain under pressure in the near term, with supply outpacing demand across key sectors.
• The market, which typically leans on demand from bulk drug manufacturers, is facing headwinds as major pharma units operate at reduced capacities. Weakness in feedstock markets is also likely to keep price sentiments bearish.
• Buyers are advised to follow a Just-in-Time procurement strategy and avoid building inventory in the current oversupplied market.