By Ning Lihong, Sublime China Information Co., Ltd.
The coronavirus increased sales of epidemic prevention products, stimulating, directly or indirectly, prices of ethanol, PP, isopropanol and acetone. Export orders of isopropanol have skyrocketed since mid-March. This led to soaring demand for acetone. Acetone supply that was slightly tight made prices of downstream products grow in varying degrees.
Entering the second half of 2020, domestic acetone prices fell after reaching a certain high. However, the prices have rebounded rapidly since mid-August due to reasons like: 1) delayed offloading at ports because of typhoon; 2) port inventories hitting a record low of 3 800 tons; 3) external market prices up 36.67% from US$600/t in mid-August to nearly US$820/t; 4) mainstream factories raising prices by around RMB900/t during August 31-September 7.
Figure 1 Acetone prices in Jiangsu, eastern China in 2019 and 2020
In addition, the new 650 000 t/a phenol and acetone unit of Zhejiang Petroleum and Chemical Co., Ltd. (Zhejiang PC) stopped running in September owing to malfunction. The 400 000 t/a phenol and acetone unit of Shanghai Sinopec Mitsui Chemicals Co., Ltd. halted production in June and restarted in August, but acetone quality was not as good as expected. Hence failure in increasing domestic acetone supply, another reason for the fast rebound of prices.
In the fourth quarter, the acetone market will be mainly affected by new units, capacity expansion of downstream industries, cost changes (i.e. prices of pure benzene, propylene, etc.) and related products such as phenol. Acetone supply will grow if the abovementioned unit of Zhejiang PC restarts successfully, and Lihuayi Weiyuan’s 350 000 t/a phenol and acetone unit (phase II) manufactures qualified products. Among downstream industries, only the isopropanol industry plans to put new units on stream in Q4 – a 50 000 t/a isopropanol unit of Huizhou Yussen Chemical Co., Ltd. and a 50 000 t/a isopropanol unit of Maoming Shihua Dongyou Chemical Co., Ltd.
