India acetone may fall further on weak downstream demand
Michelle Lim
15-Oct-2014
Focus story by Michelle Lim
SINGAPORE
(ICIS)–Spot prices of acetone in India may continue their
downtrend for the rest of the month, with downstream demand
not expected to improve until November at the earliest,
market players said on Wednesday.
Offers for November northeast Asian cargoes exempt from anti-dumping duties (ADDs) were quoted at $1,095-1,105/tonne CFR (cost and freight) India this week, they said.
Deals for dutiable southeast Asia cargoes were heard at $1,070/tonne CFR India this week, market sources said.
On 8 October, acetone prices were assessed at $1,070-1,120/tonne CFR (cost and freight) India, down by $10-50/tonne from the previous week, and $45-60/tonne lower from 17 September, largely tracking declines in the key China market, according to ICIS data.
Hefty declines in prices of upstream naphtha and feedstock benzene have been weighing on the acetone market, industry sources said.
At midday, naphtha was down $23.50-24.50/tonne from Tuesday at $715.50-718.50/tonne CFR Japan, while benzene slumped $35/tonne to $1,060-1,065/tonne FOB (free on board) Korea.
Trading in the Indian acetone market is expected to be quiet next week, leading to the holiday of Diwali or Festival of Lights on 23 October, market sources said.
Meanwhile, talks of ADDs that might be imposed on acetone cargoes from Taiwan and South Korea – possibly by yearend – are also worrying market players.
Importers are wary of procuring cargoes, which they may not be able to re-sell by the time the ADDs take effect, market sources said.
The last five-year ADDs on imports of South Korean acetone that was extended by a year expired on 9 June this year.
Dutiable cargoes from Europe and southeast Asia are subject to ADDs of $212/tonne and $147/tonne, respectively, and they are typically offered at lower prices than cargoes from Taiwan, Saudi Arabia and South Korea, which currently enjoy ADD exemptions in India.
Offers for dutiable cargoes from Europe and southeast Asia are being reduced to boost buying interest, market sources said.
“Buying sentiments are simply poor. It’s not just the typical lull before Diwali, during which buying activities slow down, a northeast Asian producer said.
“Producers, which face ADDs in the Chinese market, have all been trying to sell [to] India, and that has resulted in ample supply in the market,” the producer said.
Concerns among exporters about oversupply in the domestic acetone market also heightened following the restart of a phenol/acetone plant by Hindustan Organic Chemicals Ltd (HOCL) at Kochi in Kerala over the weekend, market sources said.
The plant can produce 40,000 tonnes/year of phenol and 24,640 tonnes/year of acetone, according to the HOCL’s website.
Regional supply, on the other hand, may tighten as LG Chem is due to shut down its phenol/acetone plant in South Korea for a month-long turnaround from 25 October.
The LG Chem plant can produce 300,000 tonnes/year of phenol and 180,000 tonnes/year of acetone.
Acetone is used as a solvent in the manufacture of pharmaceuticals and industrial coatings.
Read John Richardson and Malini Hariharan’s blog – Asian Chemical Connections
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