Acetone is widely used as a popular commercial solvent with a huge array of applications across different industries. Accordingly, acetone has witnessed a steady rise in its demand in recent years. The chemical properties of acetone are suitable for the purposes of synthesizing different chemicals which also broaden the scope of acetone’s end-user applications. Over the years, acetone has become integral to the manufacturing of paints, varnishes, detergents, carpets, adhesives, and chemical explosives. Acetone is also extensively used in the pharmaceutical and perfume industry due to its highly volatile properties.
While growth is anticipated in the acetone market over the forecast period, currently, the acetone market is adequately supplied. This places the bargaining power in the hands of the buyers. As a result, the overall market revenue of acetone is affected. Currently, the acetone market revolves around the Asia-Pacific region.
Acetone Market: Global Outlook
The global demand in the acetone market is on the rise with an anticipated compound annual growth rate (CAGR) of 3.4%. The global acetone market consumption in terms of volume is estimated to touch 7.74 million metric tonnes by the year 2022.
- There is a significant amount of demand from emerging economies such as countries in Northeast Asia and Southeast Asia. In fact, the Asia Pacific countries are large growth domains for the acetone market going forward due to the downstream applications in construction and automobile sectors which are booming in these economies. The Asia Pacific also has the highest concentration of acetone market capacity, evaluated at 45%.
- The two most prominent segments of Acetone are Bisphenol A (BPA) and Methyl Methacrylate(MMA). They are the major demand drivers of the acetone market. While BPA is broadly used as a solvent in paints, varnishes, coatings, etc., MMA is largely used in pharmaceuticals and cosmetics industry.
- The acetone market, by and large, is over-supplied, stemming mainly from the prolific production of phenol. While the global capacity stood at 8.37 million metric tonnes in 2017, the global demand for acetone was measured at 6.55 million metric tonnes in the same year. However, the capacity demand gap is seemingly reducing since 2019.
- Despite having a 46.1% share of the acetone market capacity, Asia Pacific continues to be the major importer of acetone whereas Europe is the biggest exporter of acetone.
- There is a large amount of demand from emerging economies such as countries in northeast Asia and southeast Asia. In fact, the Asia-Pacific countries are large growth domains for the acetone market going forward due to the downstream applications in construction, automobiles, and personal care. which are booming in the global economies.
- China dominates the demand for acetone in the Asia Pacific region and the booming demand for acetone in the electronics and personal care industries predict a further rise in the CAGR. Around 37% of the acetone market revenue in China arises from the personal care and cosmetics industry.
Acetone Market: Industry trends
- Over recent years, environmental regulations, especially by the European Commission on the usage of solvents, have created an impact on the acetone industry. research and development need to be dedicated to addressing this issue to avoid any dent in the projected growth rate.
- The demand for acetone is more than that for phenol due to the growing investment in economies such as India and Latin American nations
- ● Due to price fluctuations and heavy volatility, again rising from the interdependency of phenol and feedstock on acetone prices, there is a tendency for companies to go for long term contracts rather than spot contracts due to the potential losses that they can incur if future prices shoot up. North America, Asia, and Europe have mostly contract-based engagements with roughly 80% in Europe and North America and 60 % in Asia utilizing the contract-based engagement model.
- The economic buyer power is high for nations in Asia and Europe and is medium in North America. Conversely, the supplier power is low in Asian and European nations while being medium in North America.
- The markets have seen volatile gap growth and shrinkage in the years. For example, there has been a positive gap growth in the years 2013, 2014 and 2015 while the most shrinkage of the gap comes in the years 2016 and 2017 where we see a chart-topping gap shrinkage of 11%. The year 2017 was also when the global demand and supply gap became less than 2 MMT worldwide.
- There is a marginal price increase in the acetone market between the last quarter of 2018 and the first quarter of 2018 to the tune of 1 percent of baseline acetone prices worldwide. Benzene and propylene contract prices are used as a base to arrive at acetone prices.
The acetone industry has a steady prospect due to its diverse set of applications in various industries which is likely to propel its demand over the forecast period. At the same time, a rise in regional capacities of acetone production will also boost the overall growth of the acetone market.