Acetone Prices Decline as Inventories Surpass Demand Volume in the US

Texas (USA): Acetone prices in the US market continued to decline as demand volumes experienced a slowdown until the middle of Q1. However, benzene prices, which are a primary feedstock of Acetone, continued to increase in the US market amidst higher demand from domestic and international industrial and commercial units. Acetone prices witnessed a surge in Q4 of 2023 due to limited inventories. Conversely, in Q1 of 2024, the situation reversed, with Acetone inventories proving to be sufficient against a moderate demand outlook from end-use manufacturing units. As of the week ending February 23rd, Acetone market prices were recorded at USD 1460 per MT, FOB Texas.

Margins in the Atlantic Basin, particularly in the US Gulf Coast, rebounded, led by a $4.50/bbl increase on average in margins following a mid-month winter freeze. The late-month rally in cracks drove the increase in USGC margins, pushing Atlantic Basin margins to their highest level since late September. The extreme Arctic freeze in key oil-producing regions of the United States and Canada led to significant supply outages, coinciding with voluntary output curbs by some OPEC+ countries. Geopolitical tensions in the Middle East added to the upward momentum, as disruptions in the Red Sea impacted supply flows to global markets.

In the last month, the housing market remained tough for buyers but favorable for sellers, according to a recent report from the National Association of Realtors (NAR). However, there was a positive development as sales of existing homes, which are previously owned properties, increased slightly due to a rise in available listings. As a ripple effect, demand for Acetone from the paints and coatings sectors fluctuated throughout the month.

Given the increased geopolitical risks and low global oil inventories, a modest surplus could help stabilize the market and reduce volatility. In December, there was a significant increase in oil on water, with a surge of 60 million barrels (mb), due to year-end tax considerations and tanker owners diverting ships away from the Red Sea to avoid disruptions. Low oil inventories make the market more sensitive to supply and demand shocks and may limit the Acetone industry's ability to respond to unexpected changes in demand or supply disruptions of Acetone and its derivatives. According to ChemAnalyst, Acetone prices in the USA market are expected to experience gradual and stable changes in the first quarter of 2024. This trend is supported by improved productivity rates and a moderate demand outlook.