In starting of Q2 2025, raffinate market saw no relief as a combination of declining downstream industries like paints, coatings, and gasoline blending, escalating U.S.-China trade tensions, and consistently large stocks caused raffinate prices to decline in both Asia and North America.  Chemical markets were shaken by the prospect of new tariffs between the two largest economies in the world, which worsened the already bleak demand picture.  Raffinate producers and traders were under growing pressure to reduce offerings in order to clear out large inventory as construction work slowed, industrial activity slowed, and the market for methyl ethyl ketotone (MEK) and MTBE weakened.

China's raffinate market was under increasing pressure in Asia.  Low consumption of paints and coatings, downstream markets for methyl ethyl ketones (MEK), put significant impact on raffinate demand, continued to struggle.  Production remained high despite previous plant turnarounds, which led to swollen stocks and forced merchants to lower bids in order to clear stock.  The combination of stable operations, fresh capacity expansions, and a lack of buying enthusiasm caused raffinate prices to decline further.

China's difficulties were reflected in the raffinate market in India.  The demand for downstream products decreased as a result of a slowdown in construction activities and a lukewarm demand from the paint and coatings divisions.  Raffinate prices steadily declined as a result of this restricted offtake.  Market participants noted cautious purchasing patterns, with many customers choosing to make few purchases in the face of pessimistic forecasts.

In meantime the raffinate industry in North America was not immune to the decline.  Due to excessive supply levels and weak construction demand, raffinate prices in the US saw a significant drop.  Although MEK consumption was somewhat supported by vehicle sales, this was not enough to counteract the overall decrease.  Applications for downstream paints and coatings, which are essential for raffinate, continued to face pressure as the number of new homes built fell precipitously and buyer confidence declined due to ongoing interest rate worries.

Global trade war in between US-China war caused more complexity for the raffinate market.  Supply networks may be disrupted, trade flows may be affected, and raffinate prices may become even more volatile because of new tariffs and punitive actions.  An extended trade war may stifle investor confidence and manufacturing activity, two important factors influencing raffinate demand, further depressing an already fragile market.

With the combination of price of methyl tert-butyl ether (MTBE) which is an another significant raffinate derivative, dropped in both Asia and North America.  MTBE markets were impacted by plentiful supplies and slow demand for gasoline blending in China, while U.S. MTBE prices fell precipitously due to growing inventories and a lackluster export demand.  The decline in nearby chemical markets added to the pessimism around raffinate pricing.

ChemAnalyst observes, raffinate's short-term prognosis is still cautious.  Future maintenance tasks and a seasonal increase in demand for gasoline around the May holidays might offer short-term support, but the underlying fundamentals for raffinate still seem pessimistic.  It is expected that raffinate prices will continue to be under pressure throughout the second quarter unless trade tensions subside, and downstream industries rebound.