China's domestic acetone prices fell to a two-year low amid increased supply in June while demand is weak, wtih downstream plants at major production hubs running at reduced capacities due to strict government-led environmental checks.
China's monthly domestic acetone supply increased by around 10,000 tonnes with the start-up of CNOOC and Shell Petrochemicals Co's(CSPC) 350,000 tonne/year phenol/acetone unite in Huizhou in early May.
The plant, which can produce 220,000 tonnes/year of phenol and 130,000 tonnes/year of acetone, has been running normally.
Meanwhile, other phenol/acetone producers were running their plants at high rates on the back of strong margins following sharp declines in cost of feedstock benzene. The average operating rate of domestic plants stood at more than 90% on 22 June.
But this month, downstream facdtories producing isopropanol(IPA), isopropylamine(MIPA),methyl isobutyl ketone(MIBK), aliphatic water reducer, adhesive and solvents in the provinces of Shandong, Jiangsu and Guangzhou have had a cut operating rates or shut down in response to stricter government inspections for environmental compliance, market sources said.
Biahphwnol A(BPA) and methyl methacrylate(MMA) plants, on the other hand, were running normally, they said.
"Previously, some producers could run their plants at night after the inspections in daytime. However, this is no longer possible," a market participant said, noting that time around, the strict environmental isnpections are being conducted by a group from the central government.
Consequently, demand for acetone has shrunk, leading to high inventories at east China port. On 25 June, inventories in Jiangsu were at around 29,000 tonnes, higher than the usual 20,000 tonnes.
The inventories will further build up as some 3,000 tonnes cargoes from CSPC are expected to arrive in east China late this week, while around 5,000 tonnes from the Middle East would arrive in the short term, market sources said.
for price or more information,