Acetone Prices Explained

Acetone prices posted varying trends across major markets. In North America, it showed mixed signals as demand from the downstream industries resulted in a solid price increase. This was supported by logistical challenges and decreased operational rates at phenol plants (important for acetone production). Additionally, the consistent fluctuations of naphtha prices impacted the commodity’s prices. Furthermore, the seasonal demand from the construction sector contributed to its steady track.

In the APAC market, the region posted a significant upward trajectory as fixed inquiries from the end-user industries and varying crude oil and naphtha prices dominated the Asian market. The pharmaceuticals and personal care product industries have been consistently dropping orders and the rising production costs elevated acetone prices. This uptick was particularly present in Japan as acetone prices surged 29%.

However, the European acetone reported a bearish market as oversupply and plenty of feedstock (propylene) offset the region’s demand. This surplus was exacerbated by stable production rates and the limited inquiry from downstream sectors like personal care, adhesives, and solvents. Adding pressure to its cooling prices is the escalating Red Sea tension which prompted merchant vessels to more costly routes, translating to increased shipping costs.

Why are acetone prices fluctuating?

1. Production Costs

The petrochemical industry is the primary determinant of acetone prices. This commodity is manufactured through a cumene peroxidation process which takes 3 ways to produce 90% phenol. This method consumes significant energy with a lower yield of 18.1%. Additionally, the production of this commodity contributes to the greenhouse effect which requires companies to pay for carbon emission taxes for sustainability.

2. Downstream Sectors

While demand from other regional markets varies, the personal care and liquid industries (particularly solvents) show increasing demand volume for acetone as these manufacturers aim to scale their production capacity. For instance, downstream sectors from the North American and APAC markets continuously follow a stable trend as domestic demand from each market stabilizes supply surplus. This segmented market keeps the commodity afloat amid uncertainty.

3. Phenol and Its Alternatives

One unit of acetone needs two units of phenol to complete its production. Phenol is a common component of oil refinery wastes. This ingredient is also produced by coal conversion into gas or liquid fuels. The Agency for Toxic Substances and Disease Registry tagged phenol as a skin irritant and a known promoter of tumors (particularly on long-term exposure). For this, manufacturers switch to using lignin (a natural polymer from wood cells). This ingredient has similar structures to phenol, a good potential feedstock for renewable fuels and chemical production.

Thus, the utilization of lignin will affect the marketability of phenol and increase the quality of acetone as a sustainable material in its intended application.

Which variables impact the price of acetone?

• Production Costs
• Downstream Sectors
• Phenol and Its Alternatives
• Supply Chain Crunch
• Geopolitical Issues

Where does acetone come from?

This colorless, flammable, and volatile liquid is a popular industrial solvent. It is a popular ingredient in making personal care, cosmetics, and pharmaceutical products. This chemical is naturally present in trees, plants, tobacco smoke, vehicle exhaust, and landfills.

Acetone is manufactured in three different ways:

1. Steam Cracking of Naphtha – This method is used in producing large volumes of acetone. Sharjah, United Arab Emirates (the largest single-site petrochemicals complex in the world) uses this process in its operation.

2. Acetone Dehydration – Jean Guillaume developed this technique in the 1920s. It is one of the most economical ways of converting naphtha into acetone by using steam and water under high temperatures to remove acetone from the naphtha stream.

3. Acetone made from Propylene – This method includes combining propylene and oxygen to form acetone (oxo-propene process). This technique produces high-quality products with less contamination compared to other processes. Japan uses this method which allows it to produce 3.2 million metric tons of acetone (making it the 3rd largest producer, next to China and the United States).

Most companies use acetone in small amounts (according to its grade purity) to create products by breaking down or dissolving other substances. These are the three different grades of its purity:

1. Technical Grade – The lowest grade which contains only 5% organic impurities. It is used for industrial purposes such as degreasing, metal and machines, and cleaning electronics.

2. Reagent or ACS Grade – It contains 95% organic impurities, suitable for consumer products and personal care uses, such as cleaning glassware and nail polish removal.

3. USP Grade – The highest and safest grade which has 99.9% organic impurities. It is good for pharmaceutical, medical, food packaging, and production processes.

What are the uses of acetone?

The commodity’s ability to dry faster than low-solvent alternatives makes it an important ingredient in painting and coating products. Also, acetone serves as a precursor in the chemical synthesis of various compounds.

Here are the common applications of acetone:

1. Cosmetics – Its ability to break down oils and fats easily makes it an important ingredient in making nail removers as it dissolves the resin in nail polish, making removal easier.

2. Perfume – In perfumery, it is used in extracting and blending essential oils to elevate their sweet aroma. Acetone is common in feminine scents as it dissolves quickly on the skin.

3. Cleaning Agents – Acetone is a strong cleaning agent that cuts through grease, waxes, resins, and other residuals that can clog machinery or molds.

4. Used as a Fuel – When mixed with a volatile solvent such as glycerin, it is used to combine with liquid oxygen to make a flammable and toxic gas. However, this type of gas burns very poorly which is not good for combustion.

5. Pharmaceuticals – It is an ingredient in some medicines that are effective in managing pain and controlling seasickness. Additionally, acetone is used as an organic thickener, emulsifier, and buffer in some cosmetics, drugs, and food products.

What is the future price of acetone?

Acetone is mostly utilized as a solvent in paints, coatings, agricultural chemicals, cosmetics and personal care industries, and adhesives. This segmented trade covers 85% of the market, with a prominent share of about 69.4%.

While global demand looks weak due to the slowing housing demand from China, the North American market attracts cargoes from Asia as the region’s market showed stability in its end-user industries. Additionally, India’s expanding pharmaceutical industry finds uncompromising producers like Taiwan, South Korea, and Saudi Arabia (which are looking for a diverse market to avoid the Red Sea tension).

India’s pharmaceutical industry is projected to reach $130 billion in 2030, attracting investments. For instance, Haldia Petrochemicals Ltd. (an Indian company) invested $360 million to establish a new phenol/acetone production facility to cover the country’s growing domestic demand.

Additionally, the rising need for bio-based acetone sourced from biomass, industrial waste streams, and agricultural residues is a great nod for sustainable manufacturing that prompted some industrial key players to introduce bio-based acetone for use in various sectors.

For example, Vertec BioSolvents Inc. (an American innovative manufacturer of green solvents) launched ELSOL AR, a bio-based acetone solution applicable to manufacturing, pharmaceutical, industrial, and environmental cleaning requirements.

Overall, this shifting trend will contribute to the marketability of acetone prices in the market which is expected to be $1,500 tons in 2028.