MIBK Prices Show Pessimistic Outlook in the US, Cosmetic Sectors Impacted

Investors in the Methyl Isobutyl Ketone (MIBK) manufacturing company have a pessimistic outlook for the American drugs industry, indicating an expectation of reduced long-term growth rates compared to historical levels. This suggests that while investors anticipate slow growth, they still perceive the industry's valuation as relatively attractive based on its earnings potential. The lower Price to Earnings ratio indicates a possible undervaluation compared to historical norms, while the proximity of the Price to Sales ratio to its average suggests stability in terms of revenue generation. The market reflects cautious sentiment toward the cosmetics and excipient drugs sector, considering its growth prospects and valuation metrics, which impact the MIBK market.

Interestingly, MIBK sales revenues have remained relatively unchanged during this period. This indicates that while sales have maintained a steady level, operating expenses may have risen, or reinvestment back into businesses has increased. As a result, these factors have contributed to a decrease in profits. In summary, despite stagnant MIBK sales, the overall profitability of companies in the drugs sector has been negatively impacted due to rising business costs or higher levels of investment. The market value of MIBK in the USA has decreased, with costs at USD 1850/ton FOB Texas.

According to traders involved in the product supply, the MIBK inventory level has been high due to steady or low sales observed in the German market. Meanwhile, freight charges from North America East Coast to North Europe have remained stable at USD 356/ton, seemingly having no impact on the regional market price of the MIBK. In February, the Oceania-North America shipping route experienced the most significant decline, dropping by 16.2 percentage points to 44.9%.

Furthermore, reliance on shipments on the Asia-North America West Coast route decreased by 4.0 percentage points, reaching 30.2% compared to the previous month. However, there was an increase of 3.5 percentage points in reliance on shipments on the Asia-North America East Coast route, reaching 39.2% on a month-on-month basis. These changes indicate decreased shipping activity of MIBK between Oceania and North America, reduced dependence on shipments to the West Coast of North America from Asia, and increased reliance on shipments to the East Coast of North America.

The factors in this market mentioned above have changed, and the ChemAnalyst team perceives the current bullish MIBK market as a temporary replenishment of inventories following the summer break in Latin America. Central America's exports are further weakening due to prevailing market conditions. Mexico's exports to Northern Europe, the Mediterranean, and the Middle East have also softened. Vessel availability for MIBK supply is high. Despite being in the midst of the contracting season, the South America East Coast (SAEC) market continues to exhibit a rapid downward trend in rates towards Europe and the Mediterranean. Rates have returned to levels seen before the onset of the Covid-19 pandemic.