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SunSirs: Crude Oil Plummets and Acetone Market Falls Sharply

March 11 2020 10:49:20     SunSirs (John)

As OPEC and non-OPEC oil-producing countries fail to reach a consensus on how to respond next, since April 1, these countries will no longer be bound by production caps or production cuts. This remark put OPEC +, which was not monolithic, into a state of collapse. On Monday (March 9) , the settlement price of West Texas Light Oil futures of April 2020 in New York Mercantile Exchange was 31.13 US dollars per barrel, down 10.15 US dollars from the previous trading day, a decline of 24.6%, trading range was 27.34-34.88 US dollars; The Brent crude oil futures settlement price of May 2020 on the exchange was 34.36 US dollars per barrel, a decrease of 10.91 US dollars from the previous trading day, a decrease of 24.1%, and a trading range was 31.02-38.34 US dollars. The sharp drop in crude oil worsened the acetone market, which was already in a wait-and-see situation. On March 9, the market fell by 200 RMB/ton, and the East China market reported 4,450 RMB/ton. Acetone is a petrochemical product. Affected by cost, acetone is largely related to crude oil. However, at the same time, it is also affected by social inventory and downstream demand, as well as fluctuations in its co-product phenol market. After the holiday, the acetone market is in a doldrums. The decline in crude oil completely suppresses the entire petrochemical product, and the petrochemical market is overwhelming.

Looking back at 2019, the acetone market once fell below 3,000 RMB/ton at the end of the first quarter. Nowadays, with low demand, social inventories are high and crude oil has plummeted. Costs will also be suppressed. It is expected that the short-term acetone market will still have downside. At present, the offer in East China is 4,450 RMB/ton, the offer in Shandong area is 4,750 RMB/ton, the offer in surrounding areas of Yanshan is 4,750 RMB/ton, and the offer in south China is 4,650 RMB/ton. It will take some time to digest this decline, and the demand will improve in the later period, but it will take time for the market to digest it. In the medium and long term, it is more difficult to return for acetone market.

 

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