Acetone Market Intelligence

Industry Outlook & Drivers

Global Market Outlook on Acetone

The global demand of acetone is estimated to grow at a CAGR of 3.4 percent to reach 7.74MMT in 2022.APAC has the largest installed capacity and it is the fastest growing region with demand from downstream construction and automobile industries

Demand Market Outlook

• Currently, the acetone market is over-supplied and the capacity demand gap is expected to reduce marginally after 2019, as no newly capacity additions have been announced
• The market, is however far from being tight-supplied, and hence, giving more negotiation power to buyers (particularly from BPA segment)
• Stronger demand for acetone than for phenol would continue to pressure acetone supply mainly from the growing investment in economies, such as LATAM and India

Industry Best Practices

• In North America and Europe, benzene and propylene contract prices are used as a base to arrive at acetone prices
• About 85–90 percent correlation between benzene and acetone, and the same between propylene and acetone implies greater dependency over the feedstock price movements
• The top manufacturers in Asia publish their individual quotes and the average, of which is reported as Asian Contract Price (ACP) by the price reporting organizations. Other market players tend to use this as a base in arriving at their contract prices

Global Market Size: Acetone

• Major demand drivers are the increasing downstream demand from BPA, MMA, and pharmaceutical segments in Asia and other developing economies
• From 2014–2015, the average price of acetone across all the region decreased by 25–30 percent, due to the slump in crude oil prices from 100 $/bbl. levels to 30 $/bbl. levels Y-o-Y

Global Capacity–Demand Analysis

• About 45 percent of the global acetone capacity is concentrated in Asia
• About 0.8 MMT capacity additions have taken place between 2012–2014 and 0.838 MMT and it is expected to come online between 2019–2022, making Asia, especially China less dependent on imports
• The production of acetone is interdependent on the demand for phenol, as acetone is a by-product during phenol production
• When there is an excess supply of phenol and high demand for acetone, phenol is converted to acetone to cater the demand

Market Outlook

• Current capacity – demand scenario: On a global level, there is an excess capacity, however, this excess capacity is mainly concentrated in Asia
• With a moderate growth rate, demand from downstream industries, like construction and automobile in developing economies, is expected to drive the demand for acetone
• Future capacity – demand scenario: About 0.838 MMT of acetone is expected to be added to the overall production capacity by the end of 2022
• Due to matured demand growth rates in North America and Europe, future capacity additions are mostly planned in Asia, specifically China, where the demand is growing at a faster pace
• These additions are further anticipated to reduce Asia's dependency on imports from Europe and North America

Engagement Outlook

• Low volume buyers in North America, Asia, and Europe are recommended to have long-term contracts with acetone manufacturers for supply security
• As there is a heavy price volatility, due to high dependency on phenol and feedstock, contract models are much favored compared to spot

Global Demand by Application

• Acetone demand is expected to be driven by the developing economies like Asia and LATAM, as the major downstream applications of acetone are directly linked to the construction and automobile sectors
• BPA and MMA segments are likely to grow at 4.5 percent and 4.3 percent, respectively. This increasing demand is majorly from the automobile and pharmaceutical industries and it is anticipated to drive the demand for acetone