Acetone Market Intelligence

Industry Outlook

Acetone Market Analysis and Global Outlook

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

The major supply share of the acetone market is from North America: 21 percent, EU: 26.4 percent and APAC: 46.1 percent. The fluctuating prices of benzene and propylene are the major drivers of acetone production cost in the global acetone market. Benzene and propylene contract prices are usually finalized in the first and last week of the month respectively, based on which market players arrive at the market price of acetone.

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 acetone suppliers 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

Acetone Market Overview

The industrial sector is the largest end-user for acetone and is expected to occupy 58 percent of the acetone market share.The North American Acetone market is highly mature with equally mature acetone manufacturers. The top 3 acetone suppliers holding over 60 percent of the overall capacity in the region. 

Abundant availability of feedstock propylene and benzene supply in the market coupled with cheaper feedstock prices have a positive impact on the acetone market.The acetone market is already suffering from excess capacity with average operating rates hitting 80 percent levels. The US acetone market price witnessed a slight increase during August 2019, due to an increase in the price of feedstock propylene.

Average operating costs are high in Europe, due to a low number of backward integrated acetone suppliers to benzene and propylene. Asia is a cost-effective region, due to cheap feedstock, labor, and low electricity prices. Asia Pacific holds the largest market share for acetone suppliers (46 percent) out of which 19 percent is China alone. 

Why You Should Buy This Report

• Key profiles and SWOT analysis of acetone manufacturers such as Ineos Phenol, Sinopec group, CEPSA Quimica, etc.
• Detailed market cost structure and price trend analysis.
• The report gives information about the drivers and constraints of the global acetone market.
• Best sourcing models and industry practices.