HOUSTON (ICIS news)--New ways of managing margins are beginning to appear in acetone markets amid rising feedstock costs and talk of an economic recession, industry sources said on Thursday.
During the fourth quarter, US large-buyer acetone barge contracts settled up 3 cents/lb ($66/tonne) at 47.5 cents/lb (Euro.32/lb), according to two major buyer-and-seller parties involved in the negotiations. However, at least one major buyer and seller decided not to communicate their fourth-quarter large buyer settlement.
Also, two major sellers involved in acetone negotiations said their large-buyer settlements would no longer be reported in 2008. One of the sellers would move from quarterly to monthly pricing.
Recession talk heated up after worries over the US economywere revealed in official data during the first half of January.
US central bank chief Ben Bernanke on Thursday told a hearing of the House Budget Committee that the financial turmoil triggered by the failure of repayment guarantees in the US mortgage market may continue to be a drag on growth for a good part of this year .
The continued strength in crude oil prices despite a slight reprieve in recent days has prompted analysts at Bank of America (BOA) to predict higher chemical prices and lower margins in 2008.
Acetone producers, issuing 5-20 cents/lb in hikes for first-quarter contracts, have said they must pass on the rising cost of production to restore margins.
Major acetone sellers in the US include Georgia Gulf, INEOS Phenol, Shell, Sunoco, and Dow Chemical.
However, downstream buyers were resisting price hikes due to concerns about whether they could pass on the cost of additional hikes to their customers.
Acetone is used to produce methyl methacrylate (MMA), used in acrylic sheet applications. MMA producers include Rohm and Haas, Lucite and Evonik Degussa.
There was talk in the acetone market that some producers may offer larger discounts on published prices as a means to gain competitive market share, a producer said.
Discounts fluctuate monthly, an acetone producer said. As these large players discontinue reporting settlements, we could see discounts increase dramatically, the producer added.
For other producers, however, exports were expected to offer the solution to weak domestic demand.
But acetone exporters in the EU, Taiwan, Singapore, South Africa and the US will be affected if the definitive anti-dumping duties (ADD) recommended by India s Department of Commerce are accepted by the government.
Most of the provisional duties, originally imposed by the government on 19 June 2007 pending investigations, were raised in the latest government notification dated 4 January.
Some of the producers have said acetone supplies are tighter than phenol at the moment due to extended turnarounds both in the US and Europe.
Shell s Texas phenol and acetone plant in Deer Park continued to run at reduced rates due to unspecified technical issues.
Outside the US, INEOS Phenol will wait until its entire phenol/acetone Antwerp production is back on stream and operating normally before lifting force majeure (FM), which could keep the declaration in place into early February, a company source said.
($1.00 = Euro0.68)
During the fourth quarter, US large-buyer acetone barge contracts settled up 3 cents/lb ($66/tonne) at 47.5 cents/lb (Euro.32/lb), according to two major buyer-and-seller parties involved in the negotiations. However, at least one major buyer and seller decided not to communicate their fourth-quarter large buyer settlement.
Also, two major sellers involved in acetone negotiations said their large-buyer settlements would no longer be reported in 2008. One of the sellers would move from quarterly to monthly pricing.
Recession talk heated up after worries over the US economywere revealed in official data during the first half of January.
US central bank chief Ben Bernanke on Thursday told a hearing of the House Budget Committee that the financial turmoil triggered by the failure of repayment guarantees in the US mortgage market may continue to be a drag on growth for a good part of this year .
The continued strength in crude oil prices despite a slight reprieve in recent days has prompted analysts at Bank of America (BOA) to predict higher chemical prices and lower margins in 2008.
Acetone producers, issuing 5-20 cents/lb in hikes for first-quarter contracts, have said they must pass on the rising cost of production to restore margins.
Major acetone sellers in the US include Georgia Gulf, INEOS Phenol, Shell, Sunoco, and Dow Chemical.
However, downstream buyers were resisting price hikes due to concerns about whether they could pass on the cost of additional hikes to their customers.
Acetone is used to produce methyl methacrylate (MMA), used in acrylic sheet applications. MMA producers include Rohm and Haas, Lucite and Evonik Degussa.
There was talk in the acetone market that some producers may offer larger discounts on published prices as a means to gain competitive market share, a producer said.
Discounts fluctuate monthly, an acetone producer said. As these large players discontinue reporting settlements, we could see discounts increase dramatically, the producer added.
For other producers, however, exports were expected to offer the solution to weak domestic demand.
But acetone exporters in the EU, Taiwan, Singapore, South Africa and the US will be affected if the definitive anti-dumping duties (ADD) recommended by India s Department of Commerce are accepted by the government.
Most of the provisional duties, originally imposed by the government on 19 June 2007 pending investigations, were raised in the latest government notification dated 4 January.
Some of the producers have said acetone supplies are tighter than phenol at the moment due to extended turnarounds both in the US and Europe.
Shell s Texas phenol and acetone plant in Deer Park continued to run at reduced rates due to unspecified technical issues.
Outside the US, INEOS Phenol will wait until its entire phenol/acetone Antwerp production is back on stream and operating normally before lifting force majeure (FM), which could keep the declaration in place into early February, a company source said.
($1.00 = Euro0.68)
