In the early half of January 2024, China experienced a notable surge of around 2.5% in the prices of Methyl Ethyl Ketone (MEK), a solvent extensively used in formulating paints and coatings for automotive applications. This price hike attracted considerable attention from both consumers and industry experts, given the crucial role MEK plays in the automotive sector, particularly in the production of car bodies, bumpers, wheels, and other components. Further, some units in the MEK field were reportedly under maintenance, contributing to a partial shortening of the supply in the market. This reduction in supply, supported by factors on the supply side, led to a gradual ascent in MEK market prices. On the other side, feedstock Butanol prices experienced a downturn in the Taiwan market, a major supplier of butanol to China.

Despite an overall downward trend in upstream naphtha prices, China, a major naphtha importer, witnessed fluctuations due to supply-demand dynamics and geopolitical tensions in the Middle East. December marked a decline in MEK prices as manufacturers strategically destocked, aiming to make room for new inventory. However, as January unfolded, a reversal occurred as inventory levels dwindled, and production plants operated at higher capacities to meet heightened demand. The surge in MEK prices was not solely influenced by domestic factors but also by global trends. The Chinese automobile industry, driven by the popularity of electric vehicles and intense competition among automakers, experienced heightened demand for MEK coupled with shutdown of some MEK units.

Statistics from 2023 highlighted the resilience and growth of the Chinese automotive market. Chinese-brand passenger vehicle sales surged by 24.1% year-on-year, reaching 14.6 million units. Overall auto sales in China surpassed 30.09 million units, a 12% increase, with new energy vehicle sales witnessing a remarkable 37.9% year-on-year surge, exceeding 9.49 million units. Russia played a notable role in China's car sales, importing finished vehicles in 2023. Amid the geopolitical landscape marked by the Ukraine invasion, China strategically filled the gap left by global manufacturers withdrawing from Russia, sustaining business relations and contributing to the growth of its car sales. This move showcased China's resilience in adapting to global economic changes and maintaining partnerships, even in challenging geopolitical circumstances.

Looking ahead to 2024, projections indicate that global demand for MEK will remain stable. Therefore, ChemAnalyst believes that, in the short term, the domestic MEK market is expected to remain mostly stable until the MEK plants resume operation after maintenance. Once they reopen, there could be an ease in supply, leading to lower MEK prices in the Chinese market.