Acetone: Increased supply and increased risk of pullbacks

Since the fourth quarter, the overall performance of the domestic acetone market has been relatively firm, with an average price of 5600 yuan (ton price, the same below) to 6100 yuan
.
According to data from business agencies, as of December 26, the average price of acetone was 5,650 yuan
.
Industry insiders believe that the continued tight supply is the main driving force
supporting the strong acetone market.
In the future, the loss of production capacity of maintenance equipment will return one after another and the release of new production capacity, the favorable supply side will gradually dissipate, and the acetone market is likely to have a correction and be weak in the New Year
.

Experienced three large shocks

The acetone market quickly opened a strong pattern
in the fourth quarter.
According to data from business agencies, the average price of the domestic acetone market on October 7 was 5750 yuan, and the price on October 10 rose sharply to 6325 yuan, a sharp increase of 10% in 3 days, at which time the average market price was close to the high point of the year
.
Since then, the acetone market has experienced three sharp fluctuations, and the average price has always been 5600~6100 yuan
.

The first shock began
after National Day.
Business analysts pointed out in the research report that crude oil futures rose sharply during the holiday period, which had a pulling effect
on acetone from the macro level.
At the same time, the arrival of imported goods was delayed, the port inventory fell to 20,000 tons, the circulating supply was tight, and the market continued to heat up, and the price of acetone climbed to a high of
6,160 yuan in mid-to-late October.
From the end of October to the beginning of November, the market began a cliff-like correction, and the price fell by 550 yuan in 5 days, a decline of 8.
44%, and the average price fell back to the fourth quarter low near 5640 yuan
.

The second shock was initiated
in early November.
With the maintenance of the plant, the industry operating rate declined, coupled with the reduction of import sources, the port inventory fell to 15,000 tons, refreshing the low point
of the year.
The acetone market took advantage of this to bottom out again, holders of positive attitude, major mainstream markets have risen again, acetone prices rushed to 6120 yuan in late November, and fell back to 5760 yuan
at the end of the month.

Entering December, the acetone market began to fluctuate
for the third time.
At the beginning of the month, the demand for acetone in the downstream industry increased, the port inventory was still low, petrochemical companies concentrated on raising their quotations, and the average market price rose again from a staged low, breaking through the 6,000 yuan line in mid-December and reaching 6,020 yuan
.
After hovering at this high level for 3 days, the market turned downward into weakness, and the current average price is 5810 yuan
.

The maintenance unit was restarted, and the supply stabilized

For the strong volatility of the acetone market, Jinlianchuang chemical analyst Bian Chenhui and other industry insiders believe that the tight spot supply is the main logic
behind it.

On the one hand, the operating rate of domestic acetone equipment is relatively low, basically maintained at about 70%, while in previous years it was generally at the level
of ninety percent.
According to Bian Chenhui, the maintenance of some devices has led to a decrease
in domestic acetone production.
Changshu Changchun Chemical's 480,000 tons/year phenolone plant was shut down for maintenance on September 30, and Ningbo Taihua's 650,000 tons/year phenolone plant was shut down at the end of October, resulting in a reduction
in supply due to the loss of maintenance capacity.
Both maintenance units have been restarted
.

On the other hand, the replenishment of imported goods is insufficient, and the speed of acetone pickup is accelerating, resulting in a continuous decrease
in port inventory.
According to data from business agencies, acetone imports in November were significantly insufficient, and port inventories fell to 15,000 tons on November 7, refreshing the low point
of the year.
Due to the tight supply of imported goods, merchants have scarce spots, and even the phenomenon of no goods to sell, and major mainstream markets have raised prices
.
In the case of flat performance on the demand side, the tight spot on the supply side has pushed the acetone market to be
volatile.

For the future market, Bian Chenhui believes that the tight spot supply situation will be eased
.
"The production of pre-maintenance equipment has resumed one after another, which has a great
impact on the market.
At present, the phenolic ketone plant overhauled in China in December is only Ningbo Taihua's 480,000 tons/year phenolic plant, and other existing phenolone plants are operating normally, and the favorable support for the market in the early stage has dissipated
.
Bian Chenhui said
.

The new production capacity was significantly released, and the market weakened

More importantly, the concentration of new installations at the end of the year will have a strong impact
on the market.
In mid-November, Yantai Wanhua's new 650,000 tons/year phenolic ketone plant operated stably after it was put into operation, and the products were successively supplied to the market
.
This will be followed by two more large-scale installations
.

Bian Chenhui introduced that at present, Jiangsu Ruiheng's new 650,000 tons/year phenolone plant is about to be released, while Shenghong Refining's new 650,000 tons/year phenolic ketone plant is scheduled to be put into operation
at the end of December.
In particular, Shenghong refining phenolone plant does not have supporting downstream equipment, almost all products are supplied to the market, and although Wanhua and Ruiheng are equipped with bisphenol A equipment, there are still a small number of products exported, and the spot supply of acetone may gradually shift from tension to
looseness.

Han Xiaojie, an analyst at Longzhong Information, also believes that the addition of new production capacity will fundamentally change
the market pattern of tight acetone supply.
2022 is a big year for acetone expansion, in addition to Zhejiang Petrochemical Phase II and Yantai Wanhua, two sets of 650,000 tons/year phenolic ketone plants in Jiangsu Ruiheng and Shenghong Refining will also be put into operation by the end of the year, and the production capacity is unprecedented
.
As of December 20, the total domestic acetone production capacity has increased to 2.
59 million tons, with a year-on-year growth rate of 25.
73%.

The production of acetone in December is estimated at 220,700 tons, an increase of 24.
05% month-on-month and 57,400 tons
year-on-year.
With the effective landing of Jiangsu Ruiheng and Shenghong refining and chemical production capacity, the output will be greatly increased, but the downstream demand has not followed up in time in the short term, and the significant release of new production capacity will dominate the continued weak operation
of the market.