May 2024: Acetone Prices Stabilize in North America Amid Supply Surplus

Acetone prices in the North American market continued to follow stable trend as the supply situation for the commodity surpassed the demand strength in the domestic market. Meanwhile, benzene prices, a key feedstock for Acetone, rose in the US market due to increased demand from both domestic and international industrial and its derivative sectors. At the start of Q2 of 2024, the situation stabilized, with sufficient Acetone inventories meeting the moderate demand from end-use industries. As of the week ending May 24th, Acetone market prices were observed at USD 1420 per MT, FOB Texas.

A major percentage of Acetone consumption is done from the personal care and cosmetics sectors in the global market. The USA governs a major part of Acetone production and supply in the regional and international markets. As a ripple effect, the demand volume for commodities from personal care, sanitizers, and solvents remained on the positive side of the demand scales in the domestic market. However, the current weather conditions in the North and Southern American region are not favoring the demand and supply of Acetone in the regional market, pressuring the manufacturers to temporarily halt the production in the domestic market, keeping the steady demand in mind. Shell Chemicals, and Georgia Gulf Corporations are the major manufacturers of Acetone, and the storm and heavy rainfall had led to plant shutdown temporarily, due to force majeure restricting the supply chain in the US market.

Southern parts of America such as Brazil and Mexico are the major importers of Acetone from the Northern region of America. However, the severe rainfall and the flood conditions in the Brazilian market have reduced the demand and the end-use manufacturing units had to halt operational activities for a specific period.

The rise in inventories has raised concerns about fuel demand in the US market. Although the upcoming holiday season is expected to increase fuel demand, market participants believe that current inflation and high interest rates might constrain it.  Additionally, the market is anticipating the release of the minutes from the US Federal Reserve's April meeting, as these minutes are expected to offer more details on the Federal Reserve's plans for interest rate cuts. High interest rates affect the demand for commodities like crude oil. The energy cost and the potential availability are directly dependent on these factors, impacting the final production cost in the domestic market. As per ChemAnalyst analysis, the Acetone prices are anticipated to showcase variations in the prices in the mid-Q2 of 2024 amidst the restrained supply and increased demand for the commodity from the Acetone-consuming industries.