High Supplies and Weak Demand Keep Asian MEK Market Under Pressure

In early November 2024, Methyl Ethyl Ketone (MEK) prices across the Asia-Pacific (APAC) region remained under pressure due to weak demand from key downstream sectors, especially paints and coatings, and limited cost support from feedstock butanol, which saw only minor price increases over the last two weeks. The impact on MEK pricing, however, was negligible, as persistently low trading activity continued to characterize the market. Since the end of Golden Week, MEK supply in China and across APAC has increased, further amplifying the imbalance between supply and demand that remains strained under high inventory levels and restrained market sentiment.

Additionally, major petrochemical industries such as Sinopec and Asia Cuanon Technology are facing financial challenges, with Sinopec reporting a 55% year-on-year drop in net profit to 8.03 billion yuan due to declining oil prices, while Asia Cuanon Technology saw building coatings sales fall by 41% in the first half of 2024 as real estate values plunged 26.4% in the same period.

China’s economic challenges have compounded the ongoing weakness in MEK demand. Data from the National Bureau of Statistics, released on October 27, 2024, revealed that profits in the chemical raw materials and chemical products manufacturing industry declined by 4% year-on-year over the first nine months of 2024, underscoring a difficult business climate. From January to September, industrial enterprises above a designated size reported total profits of 5,228.16 billion yuan, marking a year-on-year decrease of 3.5%. Specifically, chemical industry profits reached 301.71 billion yuan, reflecting a sluggish recovery and weakened demand from key end-use sectors, particularly construction, where infrastructure and real estate projects continue to lag.

Alongside these economic hurdles, Asian MEK suppliers are experiencing intensified supply challenges as high production rates across the region, coupled with slow market flow, contributed to an oversupply issue. Typhoon-related disruptions temporarily delayed MEK exports from China in September, causing shipments to surge in October. However, this increase has not been enough to support prices, which are struggling under the weight of high inventory levels and subdued demand. As the market enters the winter months, MEK prices face further pressure from seasonal slowdowns, particularly within sectors dependent on paints and coatings, where economic uncertainties are causing end-users to refrain from substantial purchases.

End-users of the MEK like paints and coatings industry are grappling with low profitability and reduced consumer demand, leading to conservative procurement practices that are likely to persist. In India, major companies like Asian Paints reported a 42.4% drop in net profit for Q2 FY25 ended in September 2024, impacted by adverse weather, weakened consumer sentiment, and limited construction demand. The broader construction slowdown in India continues to cast a shadow over MEK demand, as reduced spending in infrastructure and real estate signals ongoing challenges for downstream sectors. Looking ahead, MEK prices across APAC are expected to remain under pressure as seasonal slowdowns and the persistent gap between supply and demand are likely to weigh heavily on the MEK market.