Find Out How the Oversupply of Phenol in Europe is Leading to Acetone Scarcity

Acetone prices in the European market has continued to surge amidst the tight supply in contrast to the moderate demand outlook from the end-use manufacturing units. Amid an oversupply of phenol and moderate demand from plant operators, leading European Acetone and phenol manufacturers opted to cut production and reduce phenol capacity, aiming to stabilize the market. This strategic move caused a noticeable supply-demand imbalance in the European Acetone market, driving prices higher as output decreased. The reduced availability of Acetone in Europe sent shockwaves to other regions, particularly India, where prices surged considerably.

The decision to lower phenol production stemmed from efforts to address the ongoing price declines caused by an excess of phenol in the market. However, since Acetone is a co-product of phenol production, this reduction also tightened Acetone supply chains, creating a scarcity that drove prices upward. European producers, by curbing phenol output, inadvertently squeezed Acetone supplies, causing buyers to scramble for the limited product.

This market imbalance fueled fierce price competition in India, as traders sought to secure scarce Acetone imports from Europe, further escalating prices. Despite initial signs of demand recovery, the constrained supply chain continued to exert pressure, keeping prices elevated.

Additionally, optimism over market stability grew as European shipping stocks began to recover following the resolution of a U.S. port strike. The U.S. dockworkers' union and the United States Maritime Alliance reached a tentative wage agreement, extending their contract to allow further negotiations on a new deal.

As the Acetone market remains tight, international market participants are closely monitoring global developments, hoping for potential relief from the ongoing price pressure. The combination of reduced European output and resilient demand is expected to sustain the upward trend in Acetone prices for the foreseeable future.

The current demand scenario suggests that buyers are likely struggling to secure adequate Acetone supplies due to reduced production, intensifying competition and driving prices upward. Downstream industries relying on Acetone, such as pharmaceuticals, chemicals, and plastics, may have been forced to sustain their procurement levels despite the rising costs, indicating a steady underlying demand. Although demand itself has not significantly surged, the restricted supply has heightened the urgency to secure Acetone, further fuelling price increases in the market.

Additionally, market participants are keeping a close watch on potential production restarts and whether alternative sources of supply can alleviate the ongoing shortages to stabilize prices. According to ChemAnalyst, Acetone prices in the European market may continue to face supply constraints, though demand could stabilize due to its broad industrial applications, including its use as a solvent and in the production of pharmaceuticals and chemical intermediates.