Acetone: towards full localization in 2023
Click:1    DateTime:Feb.05,2024

Bian Chenhui, JLC Chemical

Price trend review

In 2023, the domestic acetone market experienced strong volatility. As of December 8, the market price of acetone in East China fluctuated between RMB6 700 to RMB6 750 per ton (see Figure 1).


Figure 1 Market trends of acetone in East and South China

New capacity explosion

In 2023, acetone capacity in China continued to expand, with a total of 8 new units having expanded and been put into production (see Table 1). In addition, the phenolic ketone units of Qingdao Haiwan Chemical Co., Ltd. and Hengli Petrochemical Co., Ltd. have been put into trial operation, but no qualified products have been produced yet. As of the end of 2023, China's total acetone capacity had reached 3.815 million t/a, an increase of 1.278 million t/a compared with 2022, a year-on-year increase of 50.85%.


The distribution of China's acetone production capacity in 2023 by region was as follows: East China had a total production capacity of 1.95 million t/a, accounting for 51% of China’s total production capacity; North China had a total production capacity of 861 000 t/a, accounting for 22% of the total; South China had a total production capacity of 519 000 t/a, accounting for 14% of the total, and Northeast region had a total production capacity of 485 000 t/a, accounting for 13% of the total (see Figure 2).


Figure 2 Distribution of acetone production capacity by region in China

The output increased significantly, but the operating rate was lower than expected.

In 2023, the monthly operating rate of domestic acetone units remained around 60% to 90% (see Figure 3), and the overall operating load had a slight decline compared to 2022. The output of acetone in the first quarter of 2023 was comparatively high, especially in March, reaching 217 300 tons, the highest for the year. However, domestic acetone production decreased significantly from April to June, because several units had carried out maintenance for a long time including Sinopec Yanshan Petrochemical Co., Ltd., Cepsa Chemical (Shanghai) Co., Ltd., CNOOC and Shell Petrochemicals Co., Ltd., and Sinopec Shanghai Gaoqiao Petrochemical Co., Ltd. In addition, because the acetone enterprises were at a loss, the overall operating load was not high. In the second half of the year, the production capacity of acetone had a slight recovery. In the third quarter, companies began to turn losses into profits, accordingly, the operating rate had slight increase. The new acetone unit of Huizhou Chungshun Chemical Co., Ltd. Phase II was put into operation in November, and the new acetone unit of Heihe Longjiang Chemical Co., Ltd. was put into operation in December, leading to the relatively high output from November to December.


Figure 3 Changes of operation rate and output of China’s acetone manufacturers       in 2023

Import volume plummets year-on-year

From 2019 to 2023, the import volume of acetone in China showed a downward trend in overall, with one exception in 2022 when there was an increase (see Figure 4). Many acetone units were put into operation in 2023 and most of them had a complete industrial chain of phenol ketone-bisphenol A-PC. Furthermore, the new units can supply the raw material acetone by themselves, resulting in a significant reduction in the demand for import. China's acetone import volume is expected to reach 407 000 tons in 2023, a month-on-month decrease of 43.08%.


Figure 4 Comparison of China’s acetone import volume from 2019 to 2023

The downstream consumption structure remained stable, with an increasing proportion of bisphenol A.

In China's acetone downstream market, solvent is the most important consumption field, accounting for 27%, other deep processing accounting for about 69%, and pharmaceutical demand accounting for 4% (see Figure 5). The newly-added demand for acetone in 2023 mainly focused on bisphenol A, with further increased consumption share.


Figure 5 Structure of China’s acetone downstream consumption fields in 2023

In early 2023, two MIBK units were put into operation: Ningbo Juhua Chemical & Science Co., Ltd.'s 5 000 t/a unit and Kellin Chemical (Zhangjiagang) Co., Ltd.’s 15 000 t/a unit. Additionally, three MMA units came on stream: Hainan Fine Chemical's 70 000 t/a unit, PetroChina Jilin Petrochemical (Jieyang) Co., Ltd.’s 50 000 t/a unit, and CNOOC Dongfang Petrochemical Co., Ltd.'s 70 000 t/a unit. In 2023, there were three new domestic bisphenol A units: Wanhua Chemical Group Co., Ltd. Phase II 240 000 t/a unit, the Guangxi Huayi Energy Chemical Co., Ltd. Phase II 200 000 t/a unit, and the Jiangsu Ruiheng New Material Technology Co., Ltd. Phase II 240 000 t/a unit. The total domestic bisphenol A production capacity reached 4.485 million t/a in 2023.

Phenol and ketone companies were at a loss most of the time

In 2023, domestic phenolic and ketone units suffered relatively big overall theoretical loss, leading to significant decline in the overall profitability compared to 2022. In the first half of the year, the profitability of units was all below the cost line. The largest loss period during the year occurred in June, and the lowest theoretical profit was around RMB-1 334.75 per ton (see Figure 6). From the perspective of the phenol section, the price of raw material pure benzene was high, but the boost for phenol market was not obvious. Throughout the year, there were many inversions, and the supply-demand imbalance was severe. From the perspective of the acetone section, the company's theoretical profitability was good, with minimal imported goods. The spot resources were concentrated, and the market performance was strong, counterbalancing the losses of the phenolic and ketone companies.


Figure 6 Comparison of profits of Chinese phenolic and ketone companies in 2023

After the port quickly destocked, it turned to low consolidation

Since 2023, acetone inventory in Jiangyin, Jiangsu Province has been around 10 000 to 40 000 tons, reaching its peak at the end of January and the lowest point in late July (see Figure 7). In the second half of the year, most of the new units delayed operation, and port inventories continued to fluctuate at low levels.


Figure 7 Changes of China’s acetone port inventory in 2023

What will the domestic market trends be like in 2024

At present, China's acetone market has entered a mature development stage, and large-scale acetone factories adopt an integrated development model that encompasses both upstream and downstream industries. After centralized production at the end of 2023, only three new acetone units are planned to be put into operation in 2024, with a newly-added acetone production capacity of 357 000 t/a in total. Meanwhile, downstream bisphenol A and isopropyl alcohol are expected to have numerous production plans in the first quarter of 2024, and rising demand will alleviate supply pressure to a certain extent. However, in the second quarter, acetone has entered its off-season for demand, which may lead to a weaker market. In the third and fourth quarters, driven by the peak season and continued release of new production capacity in the downstream industries, acetone supply is projected to tighten, and market may rebound. Looking at the whole year of 2024, it is expected that the acetone market price in East China will range from RMB5 500 to 8 000 per ton, with the average annual price slightly higher than that in 2023.