Introduction: In the first half of 2026, the domestic acetone market experienced a roller-coaster ride of sharp rises and falls, showing an overall trend of peaking and then continuously declining. The core of the surge and collapse in acetone prices during the first half of the year lay in the shift between cost-driven dynamics and demand-driven pressures. The surge was triggered by the Middle East geopolitical conflict which pushed up crude oil and benzene prices, forcing prices higher due to skyrocketing costs. The collapse, however, was because high prices were disconnected from fundamentals, downstream plants were unable to absorb them, demand remained persistently weak, and by June, cost support crumbled as war sentiment faded. The market returned to a loose supply-demand balance, and acetone market prices plunged accordingly.

I. Wide Price Fluctuations: Sharp Rise and Fall, Roller-Coaster Ride

Phase 1: Geopolitical Conflict Ignites Costs, Prices Spike Sharply Above 8,000 RMB/tonne

At the end of February, the situation in the Middle East escalated suddenly. Shipping through the Strait of Hormuz was disrupted, causing international crude oil prices to surge, which directly pushed up upstream raw material prices of benzene and propylene. Driven by costs, acetone as a downstream product was forcefully pushed higher. The average price of acetone in the Jiangsu market surged from 4,615 RMB/tonne on February 28 to 7,750 RMB/tonne on March 9 within just a few days, an increase of 67.93%. On April 7, the acetone market briefly touched a high of 8,550 RMB/tonne. Holders were reluctant to sell, and some end-user plants entered the market for bidding and replenishment, leading to active trading sentiment. However, the main driving force behind this rapid rise was short-term cost-side pull rather than substantial demand support, laying the groundwork for a subsequent decline in price levels.

Phase 2: Lack of Demand Absorption, Acetone Market Takes a Dive

After the acetone market price hit a high of 8,550 RMB/tonne, the phenomenon of prices having no market quickly emerged. Although downstream industries passively followed the price increase, their acceptance of high-priced acetone weakened significantly. They slowed down procurement, acted very cautiously, and only maintained replenishment for essential needs. When the demand side could not digest high-priced raw materials, acetone prices completely lost support and entered a downward channel.

During May and June, the East China acetone market declined throughout the period. At the beginning of May, the average mainstream negotiated price of acetone was around 7,800 RMB/tonne, falling to 7,075 RMB/tonne by the end of the month, a cumulative monthly decline of 9.29%. Entering June, the decline of acetone accelerated further. As of June 23, the spot price of acetone had dropped to 5,400 RMB/tonne, a cumulative decline of 2,400 RMB/tonne or 30.77% compared to the end of April.

II. Supply-Demand Fundamentals: Loose Supply, Weak Demand

Looking at supply data for the first half of the year, acetone production in the first half of 2026 increased by 10.43 percentage points year-on-year, reaching a level of 1.833 million tonnes. In the first quarter, the average capacity utilization rate of domestic phenol-acetone units was at a high 87.5%, with major units operating at near full capacity. The second quarter entered a concentrated maintenance period, with the average capacity utilization rate of phenol-acetone units dropping to around 80%. At the same time, imported cargoes from Southeast Asia arrived normally at ports. In particular, import volumes surged in January and February. In March, due to the Middle East war, supply from Saudi sources was blocked, and Southeast Asian sources also made up for the shortfall in Middle East supply to varying degrees. Overall, spot circulation resources in the market were ample. In the first half of the year, Shandong Ruilin's new 350,000 tonnes/year phenol-acetone capacity was also put into operation, further increasing supply pressure.

From the demand side, the hot summer weather coincided with the traditional seasonal demand off-season, and major downstream industries performed sluggishly. Bisphenol A (BPA) was dragged down by epoxy resin demand, with plants maintaining low operating rates. Procurement volumes for isopropanol and pharmaceutical intermediates remained low. The MMA (methyl methacrylate) industry had acceptable profitability, but overall operations were lukewarm. Downstream players in the acetone chain generally adopted low-inventory, essential-needs procurement, with very little concentrated restocking sentiment being released. Market transactions were mostly quiet.

III. Costs and Sentiment: Cost Support Crumbles, Pervasive Bearish Sentiment

The upstream benzene price continued to weaken, and positive factors from crude oil were unable to be transmitted to the end of the industrial chain, significantly weakening cost support. In the first half of 2026, there was a mismatch in the pace of production capacity startups between upstream and downstream. In May 2026, two new BPA units were started up downstream: 240,000 tonnes/year units at both Jilin Petrochemical and Shandong Ruilin. Although this increased annual acetone consumption capacity by 130,000 tonnes, some existing BPA units were in concentrated maintenance periods, with overall operating rates remaining above 60%. Operating rates for MMA (ACH method) and MIBK (methyl isobutyl ketone) also declined. Overall downstream performance was lackluster, putting significant pressure on acetone supply, and the supply-demand balance remained loose.

The trend of acetone in the first half of 2026 deeply reflected the tug-of-war between cost-driven factors and demand. The sharp rise in acetone prices in March was entirely driven by soaring costs triggered by the Middle East geopolitical conflict, not by any fundamental improvement. When geopolitical sentiment gradually faded in May and June, crude oil and benzene prices fell, cost support quickly crumbled, and the market's trading logic immediately reverted to supply and demand. The sentiment of holders shifted from reluctance to sell while waiting for higher prices to proactively making concessions and destocking. Especially in June, holders proactively offered significant discounts to destock and avoid risk. Petrochemical enterprises subsequently lowered their list prices. Meanwhile, downstream players continued to wait and see, leading to a vicious cycle of "price cuts - wait and see - further price cuts," which further depressed market price levels.