Karlsruhe (Germany)- The dynamics of Acetone prices in the European market picked up once again towards the end of the second week of May, driven by tight supply from manufacturers and the limited availability of Acetone production to meet demand from MMA, personal care, adhesives, and solvent industries domestically. Propylene plays a crucial role in Acetone production. The spot supply of propylene is becoming more balanced due to the restart of a key derivative unit and issues with crackers affecting output. As of the week ending May 10th, Acetone price quotations were observed at USD 1260 per MT, FD Karlsruhe.

As the situation in the Red Sea remains highly complicated, trading companies and shipment officials continue to redirect ships around the Cape of Good Hope. Recent attacks have extended farther offshore, requiring ships to travel longer distances, increasing costs and sailing times. This situation has caused bottlenecks and congestion, leading to delays and shortages of equipment and capacity. Shipping players and Acetone buyers estimate that the industry will experience capacity loss on the Far East to North Europe and Mediterranean routes in the second quarter.

Terminals in North Europe are experiencing congestion due to adverse weather, port closures for holidays, and conflicts between services. However, major ports in the region, such as Bremerhaven and Rotterdam, are maintaining good operational results despite these challenges. Severe weather conditions in South African ports are expected to delay cargo heading for North Europe for the next two weeks. To address this, teams are using buffer times, organizing swaps to secure berthing slots, and ensuring shipping players maintain on-time arrivals in South Africa.

The pricing and trade dynamics of Acetone are influenced by complex relationships among various chemicals in the phenol value chain and propylene. Key products in this context include propylene, benzene, Acetone, phenol, bisphenol A, and MMA. Changes in MMA production economics and technological advancements have impacted Acetone demand. The personal care and cosmetics sectors are booming in the European market, consequently keeping final demand and prices of Acetone at higher levels. Additionally, past shutdowns in the Asian and North American markets have significantly impacted Acetone prices.

ChemAnalyst anticipates that Acetone prices in the European market likely to increase in the coming quarter due to limited inventories and tight supply domestically. Meanwhile, the peak demand season of Q3 is further likely to align with the price improvement and availing better margins for the market participants amidst rising consumption rates.