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Diketene is an organic compound and colorless liquid with the molecular formula of C4H4O2. It is a member of the oxetane family. Diketene is manufactured by the process of dimerization of ketene. It is used as a reagent in organic chemistry. Diketenes with two alkyl chains are used in the manufacture of paper for sizing of paper in order to improve their printability. Diketene is a highly reactive building block, which can be combined with numerous other chemical compounds to make a wide range of products. Transport of diketene is forbidden due to its high energy content. Diketene product are made with alcohols, aliphatic amines, and aromatic amines.

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Diketene, the anhydride of acetoacetic acid, and diketene derivatives can be segmented based on application into manufacture of agrochemicals, dyes, pigments, pharmaceuticals (including vitamins), and stabilizers for PVC and polyester. Other niche markets include cosmetics, plasticizers, and paints. Pharmaceuticals and pigments are the dominant applications of the market, followed by agrochemicals. The acetoacyl group in diketene of the derivatives has broad functionality. It can be used in the production of further products.

Rise in applications in pharmaceutical and pigment industries is a key factor driving the diketene market. Diketene is used as an intermediate in the manufacture of pharmaceuticals, insecticides, and dyes. For example, pyrazolones are formed from substituted phenylhydrazines. Earlier, they were used as analgesics, but are now largely obsolete. With methylamine, diketene reacts to N,N’-dimethylacetoacetamide, which is chlorinated with sulfuryl chloride and reacted with trimethyl phosphite to the highly toxic insecticide monocrotophos. Diketenes react with substituted aromatic amines to form acetoacetanilides, which are important precursors for mostly yellow, orange or red azo dyes and azo pigments. Growth in other industries such as paints and agrochemical is also anticipated to boost the demand for diketene in the near future.

Ill-effects of diketene on human health is one of key factors hampering the market. It is a strong irritant to eyes, nose, and throat. Inhalation of diketene causes respiratory tract infection and irritation. It can be harmful if swallowed or absorbed by the skin, thereby causing skin irritation. Furthermore, increase in prices of the chemical acts as a restraining factor. For instance, Eastman Chemical Company is increasing prices of its products, due to the rise in operating costs, especially raw material costs.

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Key players operating in the diketene market include Lonza, Synthetic Chemical Industry, UCC, FMC, Hoechst, and Daicel Chemical Industry.