Entering 2021, after a period of downturn, the price of acetone has once again risen. As of January 18th, acetone in East China has exceeded the 7000 yuan mark, around 7100 yuan/ton, and has risen from 5900 yuan/ton at the beginning of the month to 1200 yuan/ton, an increase of about 20.3%. In the context of the increasingly severe epidemic and the approaching Lunar New Year, why has acetone surged?

Overall, the fundamental reason for the significant increase in acetone is still the supply and demand issue. Firstly, the low level of port inventory. At the beginning of the month, the port inventory was 20500 tons, and as of 2018, the inventory was 7500 tons, a decrease of 13000 tons. The reduction in port inventory has led to tight spot circulation in the port, and most of the port goods are concentrated in the hands of a few traders, resulting in a decrease in supply. Secondly, there is a delay in the arrival of the ship at the port. Normally, the shipping schedule is mostly concentrated around the 20th of this month. If the shipping schedule arrives at the port on time, the inventory will be effectively replenished. However, due to weather and other factors, the shipping schedule for this month has been postponed and is mostly concentrated at the end of the month, further exacerbating the shortage of spot goods in the theater.

Once again, the partial parking of domestic factories has tightened the domestic supply situation. As of January 18th, the operating rate of domestic phenol ketone factories has dropped to around 75%, while last Friday the operating rate of domestic phenol ketone factories was around 89%. On Saturday (January 16th), Shanghai Sinopec Mitsui and Shanghai Xisafen ketone plants were temporarily shut down due to power outages in the park, resulting in a decrease in overall production of domestic factories. At the same time, Yangzhou Shiyou limited the delivery of acetone, which tightened the supply of domestic goods. Various petrochemical companies went up and down to increase prices, exacerbating the market speculation atmosphere and rapidly pushing up prices.

Finally, there is the downstream demand aspect. The biggest change in downstream demand is isopropanol. Last Friday (January 15th), the mainstream price of isopropanol in the East China region was 7700 yuan/ton, and it began to rise sharply over the weekend. On Monday (January 18th), the mainstream price of isopropanol in East China was around 9300 yuan/ton, with an increase of 1600 yuan/ton in just two days, and there is still an upward trend this week. The main reason for the sharp rise in isopropanol is the concentrated delivery of export orders by factories, which has caused domestic traders to delay orders and have to replenish them at high prices. At the same time, some domestic factories have temporarily stopped production, resulting in a low overall operating level and tight supply of spot goods on site. In the situation of supply shortage, the isopropanol market has risen sharply, providing strong support for acetone.

Although acetone has continued to rise since the beginning of the year, with the worsening of public health incidents in the north and the arrival of the Lunar New Year, domestic transportation has gradually stopped, and the situation of insufficient supply of isopropanol is expected to end next week. There are still many unfavorable factors in the future of the acetone market, so in the long run, acetone is unlikely to reach the high level of 2020 again, and it cannot be ruled out that there will be a decline after the sharp rise.

Article source: Zhongyu Information