Asian MEK Prices Inches-up in mid-July 2024 Amidst Market Volatility

During the mid of July 2024, the Methyl Ethyl Ketone (MEK) market in the APAC region saw a slight rise in prices after experiencing a significant decline in June. Procurement activities were cautious, reflecting ongoing challenges in supply and demand dynamics.

Seasonal factors, such as heavy rainfall, further affected the Chinese MEK market by hampering construction activities. China's domestic coal market remained sluggish due to relentless rains in South China, with sparse spot thermal coal transactions at northern ports, reducing the production cost. Supply chain disruptions on major trade routes, ongoing geopolitical tensions, and congestion at Asian ports also adversely affected market dynamics.

In July, the MEK market recovered as the weather improved, with little adjustment in supply and demand. The overall market remains stable with minimal change in production. Shipments are normal, and downstream procurement is mainly on-demand. The trading atmosphere has been mild, with new orders being purchased as needed while downstream paint and coating demand gradually recovers as the construction sector grows. In Q2 2024, MEK prices rose by 4% from Q1, indicating recovering demand in both domestic and international markets. According to the General Administration of Customs, exports in May 2024 increased by 7.6% year-on-year, supporting the market. However, cost support from the feedstock butanol market in the region declined as downstream demand for butanol was general, and the trading atmosphere was light.

Demand for MEK in the downstream paint and coating industries in the APAC market remains low due to relentless rains that hampered construction activities and high inventory levels. High production in May also led to high inventory, keeping prices down in June. As the weather improves, the construction sector is recovering, and demand for MEK is gradually increasing. Although the market is witnessing modest improvements, challenges such as oversupply and high freight costs continue to pose risks to export stability. China's real estate market is stabilizing in key cities, with cautious investment by real estate companies. Consequently, MEK prices are expected to increase due to rising demand from downstream industries. As of July 19, 2024, MEK prices were assessed at USD 1160/MT FOB Qingdao.

As per ChemAnalyst, MEK prices are anticipated to increase due to several factors. Low inventory levels are expected to exert upward pressure on prices. Demand from the downstream sector, particularly in paints and coatings, is expected to improve significantly in coming months. Additionally, demand is expected to surpass supply, exerting market dominance. With these factors in play, the MEK market is likely to see continued upward momentum in the near term.