June 29, 2023
The Acetone market has had its ups & downs over the past few years. Most recently, prices have been rising. Why? This is mostly due to two things: the Fed and rising interest rates affecting the housing market, and a fire at a Shell plant in Texas. Let’s take a look at what happened:
The Fed
As most people are aware, the Federal Reserve announced a series of interest rate increases over the past year, with the goal of curbing inflation. So, if the goal was to curb inflation, how did this somehow lead to a rising price for the commodity chemical Acetone? Rising interest rates led to a slowdown in the number of housing starts. As a result, plywood demand has been directly impacted. One key component in the production of plywood adhesive is Phenol. As plywood demand has gone down, Phenol demand has also gone down. Phenol is a co-product of Acetone- the two chemicals are produced in the same process. As less Phenol is being produced, less Acetone is naturally produced, which has led to less supply of Acetone available for consumption.
A Fire
Another crucial factor contributing to the rise in Acetone prices is a recent fire incident at a Shell facility in Deer Park, Texas. Acetone is produced at the same facility where the fire event happened. Operations were shut down as safety inspections had to be carried out.
While prices have risen in the short term, we may see things level off as housing starts pick up and Shell resumes normal operations. In the meantime, reach out to your CORECHEM representative for more information on the Acetone market and what this means for your supply and price of this commodity chemical.
