Solvents Soften in Wake of Propylene Headwinds
July 15, 2022
Acetone and Isopropyl Alcohol, two major commodity solvents, are softening due to market shifts with feedstock propylene. A by-product of crude oil and natural gas refining, propylene is experiencing both an increase in supply and simultaneously a decrease in demand.
Propylene can be derived from various intermediates, such as ethane, butane, or naphtha. Eighteen months ago, propylene prices were on an upward tear, see Rising Propylene Shifts Market for IPA, Other Chemicals. Now, flexible crackers that were primarily using ethane are switching to heavier butane or naphtha as a result of spiking ethane demand and pricing. The heavier feedslates produce more propylene in the process, driving up supply and therefore decreasing pricing.
The increasing supply of propylene happens at the same time as demand for downstream products like packaging is dropping due to inflationary pressures and some reduction in consumption.
Although crude prices remain high, this isn’t changing the fact that propylene inventories are building. And as fuel demand has normalized, there is no lack in crude refining to continue supplying the market, resulting in additional co-product propylene.
Markets for major commodity solvents Acetone and Isopropyl Alcohol are enjoying a welcome price break. One outlier to the softening pricing of propylene derivatives is Propylene Glycol. For this specific market, supply is still relatively tight, leaving no significant price breaks from softening propylene to come through for the foreseeable future.
For more information about the changes in the Acetone & Isopropyl Alcohol markets, speak to a representative. CORECHEM looks forward to supplying your Acetone & IPA needs!