Global acetone market to register a CAGR of 5.0% in terms of value during 2016 – 2026; APEJ and European regions estimated to dominate the global acetone market over the forecast period
Future Market Insights delivers key insights on the global acetone market in its latest report titled ‘Acetone Market: Global Industry Analysis and Opportunity Assessment, 2016 – 2026’. The long-term outlook on the demand for acetone market remains positive, with acetone market value expected to increase at a CAGR of 5.0% during the forecast period (2016 – 2026).
Acetone, also known as dimethyl ketone, is a colourless, clear, and volatile liquid mainly used as a chemical intermediate in the manufacture of bisphenol-A (BPA), methyl methacrylate (MMA), and aldol chemicals. It is also used as a direct solvent in various applications including paints and coatings, printing inks, adhesives, nail polish removers, and other skin care products. Other applications include higher molecular weight glycols and alcohols, MIBK and MIBC, for solvent applications (varnishes, lacquer, cellulose acetate fibre, cellulose nitrate), as a carrier for acetylene in cylinders, and miscellaneous chemical uses (manufacture of pharmaceuticals and chloroform).
Acetone is a by-product of phenol and is produced via the cumene peroxidation process which involves the reaction of propylene and benzene. The global acetone market consumption was estimated to be approximately 6.1 million tons in 2015, reaching a market value of US$ 7.3 Bn by the end of the forecast period (2016-2026).
About 96 percent of world production of acetone is a by-product of phenol production. Therefore, many trends in the phenol industry also apply to acetone market. The global acetone market is driven by solvents, which account for 34 percent of the global demand. The global acetone market will continue to maintain a healthy growth rate till 2026. The second largest end use of acetone is methyl methacrylate (MMA).
Global demand for MMA resin accounted for 25 percent of total acetone market consumption in 2017. Bisphenol A is the third largest demand sector, but Bisphenol A demand will exceed MMA demand by the end of the acetone market forecast period.
Worldwide, acetone market supply tends to be in excess for several reasons. For approximately every two phenol units produced, one acetone unit is produced. Bisphenol A is considered to be the best performing derivative. Given the capacity to meet the growing demand, some of the new capacity is based on non- acetone routes, such as units that can consume ethylene and methanol. Both can be produced at very low cost if natural gas is available at low prices previously seen in the Middle East and now in the United States.
APEJ market is expected to dominate global acetone market in terms of both, value and volume in 2017, and the trend is projected to grow throughout the forecast period. APEJ acetone market is the most attractive market, growing at a CAGR of 5.9% over the forecast period. Among the global acetone market end-use industry, the largest is chemical and allied products.
Acetone is one of the most common industrial solvents used in various end-use industries including chemical, pharmaceutical, cosmetics, etc. It is a fast evaporating solvent used in paints and coatings, adhesive manufacturing, and formulation of printing ink to dissolve the binder. The solvents segment in the acetone market is estimated to register a CAGR of 5.3% over the forecast period, creating a total incremental opportunity of US$ 1,169.3 Mn between 2016 and 2026.
Acetone market is suffering from overcapacity across the globe
Acetone market has experienced an increase in global production capacity while the demand for acetone has slowed across the globe over the last decade. The main acetone market derivatives are epoxy resins, bisphenol-A (BPA), polycarbonate, methyl methacrylate (MMA), and phenolic resins, all of which have seen a rise in new capacity investment in the past decade.
This increased capacity trend, which was, at times, seemed to be lower than the global acetone market demand, has now increased pressure in competitive pricing and change in trade flows. Upstream price movements have been significantly impacted by the overcapacity trends, as acetone and phenol are intricately linked.
Acetone - Not just a co-product
As compared to phenol, acetone market has been less affected by the new capacity addition in Asia. Acetone markets are anticipated to be more likely to short-term tightness in the next five years as compared to phenol. This is due to the fact that actual capacity has lowered and diverse range of derivatives are now getting introduced in the market. Global acetone market demand has experienced an average of 3% growth in the last five years and is estimated to experience a slight decrease over the next 10 years. Overcapacity of phenol and increased usage of ethylene to make MMA are the key rationales behind acetone market tightness.
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Changing trade flows
The capacity increase has a significant impact on the global trade and particularly on China. The lion's share of China's import volumes has been from other Asian nations, for example, Japan, Taiwan, Thailand, South Korea, and Singapore. Roughly 33% of China's acetone market imports touched base from Europe and the US. Low demand for acetone market in Asia and a decrease in higher-cost local production, both, U.S. and Europe have switched to being a net importer in 2016-17.
The ongoing reduction of Chinese imports and the lack of viable alternative markets in Asia means that surplus Asian volumes are expected to increasingly find their way to India, where there are just two domestic suppliers who currently cover only around a quarter of demand.
Petro Rabigh a question mark for acetone in 2017
The question of when the acetone production capabilities of Petro Rabigh will be implemented is perhaps the biggest unknown in the European acetone market in 2017. However, with market participants considering the opening months of 2018, many expect little change compared to 2017. In 2017 the European phenol market’s supply and demand dynamics remained relatively well balanced throughout the year.
A rapid rise in acetone market spot prices in the second quarter of 2017, after by a long period of limited softening prices. Spot prices for acetone market remained above acetone methyl methacrylate (MMA) contract price levels until the end of the year and above propylene contract levels. A joint venture between Saudi Aramco and Japan's Sumitomo Chemical, Petro Rabigh, is expected to bring new acetone market capacity online by mid-2017.
However, some European market participants remain sceptical and expect additional delays that could mean no impact on the European market until 2018. It remains to be seen when the new capacity will be operational in the Middle East and how the European market will react. The difficulties of shipping acetone and storage capacity issues in Europe have been raised by market participants as possible barriers to increased imports.
Saudi Arabia, a viable option for Indian acetone procurers
Acetone market demand in the Indian market is likely to see a rapid rise in demand from the downstream building and automobile sectors. Providing cheaper acetone in India would be a top priority with the vision of smart cities in motion. India having a lot of options to procure acetone from, Saudi Arabia is a favourable option for India to import, due to the fact that KSA has a lower cost of production and less transit time as compared to other countries such as South Korea, Singapore, Thailand, and Taiwan. Saudi Arabia is expected to have an increase in the supply of acetone as there is expected to be a new capacity addition of approximately 160 thousand MT acetone plant in 2017-18, hence representing a potential acetone sourcing market, particularly for India buyers.
European players eye on global shifts
European acetone market players continue to quote different expectations for the years ahead, behind global changes in production and expected trade flows. In general, acetone market demand is expected to be largely stable in Europe, but players are still debating the future of production and supply for Europe. Some players argue that increased acetone market demand could remove imports from the European acetone market and exacerbate regional conditions. Other players have meanwhile commented that this shift in phenol production could encourage European producers to increase operating rates. If it happens, the acetone market in Europe could be extended.
Leading players in the global acetone market
In the acetone market, manufacturers are focused on production and supply of acetone for the consumer base to retain the market share. Key players are increasing penetration in the market by increasing their global presence. New entrants need to comprehensively study the acetone market in order to penetrate and sustain in a price sensitive market. Companies profiled in the acetone market report include Domo Chemicals, The Dow Chemical Company, INEOS Phenol, Honeywell International, Inc., Mitsui Chemicals, Inc., Hindustan Organic Chemicals Limited, Formosa Chemicals, Royal Dutch Shell plc, Fiber Corporation, and CEPSA Quimica. Key players are strategically increasing their capacities worldwide through plant expansion and new acetone plant installation mainly in the Asia Pacific, to address the growing regional acetone market.
Additional Questions Answered
- key concerns related to regulatory standards for Acetone market
- What trends are impacting the demand of Acetone and how can Acetone producers leverage them?
- Which is the most lucrative regional acetone market with respect to the Acetone market adoption and demand?
- Why are the Acetone market demand highest in APEJ?
- Why is APEJ attracting most of the leading Acetone market producers?
- How logistics and supply chain management is critical element (as it requires compliance from source to customer) in Acetone value chain?
- Which end-user base to target in Acetone market?
Key segments covered in global acetone market report
To understand and assess opportunities in the global acetone market, the report has been divided into three sections based on market segmentation as:
- North America
- Latin America
- Eastern Europe
- Western Europe
End Use industry
- Chemical and allied products
- Agricultural chemicals
- Paints and coatings
- Rubber processing
- Polymer and resin processing
- Printing Ink
- Pharmaceutical drugs
- Cosmetics and personal care use
- Methyl Methacrylate (MMA)
- Others (Aldol chemicals, etc.)