Acetone hit a four-month high of $1,257/mt FOB US Gulf Coast Thursday, while phenol closed in on a six-month high, assessed at $1,455/mt FOB USG Thursday, according to Platts data.
Rising feedstock refinery-grade propylene and benzene prices, coupled with healthy demand for acetone amid lower demand and production of its co-product, phenol, have pushed both acetone and phenol prices higher, sources told Platts.
RGP has increased over 23 cents/lb in almost a month from 43.25 cents/lb January 17 to be heard at 66.5 cents/lb Thursday. With that price increase, acetone has gained over $300/mt in the last month.
While benzene was heard talked at $4.20/gal FOB USG Thursday morning, it has fluctuated between $4.10-$4.20/gal in the last three weeks. Phenol prices have also fluctuated in recent weeks, moving down after reaching a six-month high of $1,460/mt FOB USG January 24. Phenol prices have not seen these levels since August 2, when it was assessed at $1,496/mt FOB USG.
Acetone is created from phenol, but acetone production is lagging currently as phenol rates are being cut because of weak phenol demand.
"Acetone is getting short because phenol plants are not running hard," one source said. "Phenol is there, but you have to pay the price, and buyers don't want to pay that price."
A trader who sells both acetone and phenol said he had not heard of any deals done for acetone because producers do not want to sell acetone without selling the phenol with it.
An acetone trader, however, said he had several orders in the past week.
A second acetone trader said he was told by two producers that they did not have any supply, while another said they had very little volume available.
Sources agree that acetone is fairly tight right now because of the small volume being produced as phenol prices continue to increase. Sources said Shell is planning a turnaround at its Deer Park, Texas, facility, which produces 600,000 mt/year of phenol and 366,000 mt/year of acetone, in April and that will further tighten the market. Shell declined to comment.
"Acetone is tight, and it is going to get tighter," another producer said.
Along with tight supply in the US, Europe's severe winter conditions have forced phenol and acetone plants in the region to run at reduced rates, making the global market even tighter.
French chemical maker Novapex declared force majeure at its Roussillon plant, which produces 185,000 mt/year of phenol and 115,000 mt/year of acetone because of the cold weather.
The cold weather also forced Ineos to reduce output at its Gladbeck plant in western Germany by up to 50%.
One producer said it was sending any phenol and acetone they could not sell domestically to Europe.
The cost of European acetone was last talked at $1,195/mt FOB Rotterdam, with European phenol last talked at $1,665/mt FOB Rotterdam, $210/mt more than the US phenol price. With freight from the US to Europe running around $60, the arbitrage to Europe is open for phenol, but not for acetone.
