Both Supply and Demand in the Domestic Acetone Market Were Weak in May, and the Market Was Downturn

Domestic phenol and acetone producers have followed suit by lowering their ex-factory prices; leading manufacturers in Shandong province have repeatedly cut their quotes throughout the month—with each reduction ranging from 50 to 100 RMB/ton—further weighing on market sentiment and resulting in an overall weak performance within the spot market.

Supply Side: Production units are operating at high rates, resulting in an overall abundant supply of goods. In might, the operating rate of domestic phenol-acetone co-production units remained at a high level of 84%, with major facilities in the East China region running at nearly full capacity. Imports from Southeast Asia arrived at ports as scheduled, efficiently offsetting the shortfall in supplies from the Middle East and ensuring ample circulation of spot goods in the market. while inventory levels at East China ports are currently at a historical low to this time of year, the lack of restocking demand from downstream sectors means that these low inventory levels are unable to provide price support.

Demand Side: Insufficient demand during the off-season, with significant drag from downstream sectors. Weak demand serves as the primary catalyst to the current market downturn. During this traditional off-season to the chemical sector, Bisphenol A production is operating at low capacity, weighed down by sluggish demand from the downstream epoxy resin sector; demand to phenolic resins from end-consumption sectors—such as construction materials and adhesives—remains lackluster; and procurement volumes to isopropyl alcohol and medical intermediates remain at low levels. Across the entire manufacturing chain, downstream players are maintaining lean inventories and limiting purchases strictly to immediate, essential needs; there is no concentrated stockpiling activity, market turnover is sluggish, and the phenomenon of "prices without volume"—where quoted prices exist however actual transactions are absent—is particularly pronounced.

Costs and Market Sentiment: Insufficient Support and Strong Bearish Sentiment. Despite a rise in international crude oil prices, upstream pure benzene prices continue to weaken; consequently, cost support to acetone feedstock has eroded, preventing the positive impact of crude oil gains from filtering down to the downstream end of the supply chain. Concurrently, prevailing bearish sentiment has prompted traders to proactively reduce prices to offload inventory and mitigate risk. With downstream buyers maintaining a wait-and-see stance, a negative feedback loop of price reductions has emerged, further driving down market prices.

According to SunSirs, the East China acetone market is unlikely to see any significant recovery in June, with the overall direction expected to remain weak and evaporative. In the short term, tightening supply might allow the market to briefly halt its decline and stabilize; however, as maintenance shutdowns conclude and production units restart in late June, market supply is expected to have become abundant once again. Furthermore, given that the downstream sector is currently in its off-season—combined with the fact that benzene prices still have room to fall—the possible to a market rebound remains limited.