Throughout January 2024, Methyl Ethyl Ketone (MEK) prices have consistently risen in Asia, sparking considerable interest among consumers and industry experts alike. As a widely utilized solvent in the formulation of paints and coatings, the surge in MEK prices can be attributed to a complex set of factors affecting both supply and demand dynamics. The positive trajectory in MEK prices in the Indian market is the outcome of various interconnected elements. Furthermore, temporary closures of MEK production units in the early part of January, coupled with maintenance shutdowns in exporting nations like China, have led to a global supply shortage, amplifying the upward pressure on MEK market prices. The heightened demand for paint and coatings in the Indian automobile sector has further contributed to this price surge.

The MEK prices experienced an upward surge in India's domestic market, primarily driven by heightened demand from the downstream automobile sector. While prices were consistently rising in exporting nations due to the temporary shutdown of MEK production units, which have now resumed operations, there is an anticipation of stability in exporting nations like China. Concurrently, in the Indian domestic market, the demand for paint and coatings from the downstream automobile sector was robust, resulting in record vehicle sales in January 2024. Key players in the industry, including Maruti Suzuki India, Tata Motors, Hyundai Motor India, Mahindra & Mahindra, Bajaj Auto, and Honda Motorcycle & Scooter India, reported significant sales growth during the month.

Maruti's domestic sales in January 2024 witnessed a notable increase, reaching 175,443 units, reflecting a 13% rise. Simultaneously, total exports experienced substantial growth, reaching nearly 38% at 23,921 units. Mahindra and Mahindra, a prominent automotive company in India, reported an overall auto sales growth of 15% in January 2024, including exports, with a total of 73,944 vehicles sold. Additionally, the PMI for India's manufacturing sector indicated increased growth in January 2024 compared to the previous month, signaling ongoing expansion in manufacturing activities. In the first week of January 2024, the MEK price stood at INR 95,900/ton CFR JNPT, and by February 2nd, it had escalated to INR 102,100/ton CFR JNPT, representing a 6.4% increase. The existing MEK supply proved inadequate to meet the surging demand, leading to a decline in inventory levels.

According to ChemAnalyst, the brief closure of the MEK plant in China presented short-term challenges. However, with the completion of maintenance and the resumption of production, MEK prices are expected to remain stable in the upcoming months, both in the domestic market of India and the broader Asia region.