Following a mid-April surge, Methyl Ethyl ketone (MEK) prices in China's domestic market have continued to climb, driven by increased downstream demand, rising upstream crude oil prices, and internal supply chain disruptions. The expansion of China's economy, fueled by export growth, has notably heightened the demand for petrochemicals like MEK. This surge coincided with a significant uptick in demand for paint and coating downstream, especially in the construction sector, buoyed by escalating home prices. Moreover, there are signs of a gradual recovery in the purchasing power of downstream products, supported by increased cost backing from energy prices. Crude oil prices have maintained a steady upward trajectory, influenced by positive demand signals from the US and escalating geopolitical tensions in the Middle East, exacerbating supply concerns.

The recent uptick in China's exports, growing by 1.5% year-on-year in April 2024, has positively impacted the domestic MEK market, signaling a rebound in both domestic and international demand and stabilizing investor and consumer confidence. The rise in exports has also heralded a revival in economic activity, particularly benefiting export-reliant industries like petrochemicals. According to China's customs data, shipments surged by 1.5% year-on-year in April 2024. Inquiries from downstream paint coating industries have continued to surge, bolstering market sentiment for MEK amid sustained growth in the Chinese manufacturing sector. Concurrently, there has been an uptick in the overall operating rate. Additionally, heavy rains and floods in southern China, particularly in Guangdong province, have disrupted the MEK supply chain, compounded by power outages and production facility closures in the Pearl River Delta, resulting in supply shortages and subsequent price hikes for MEK. Meanwhile, the DOW's first-quarter results for 2024 show that sales of coatings have gone up. This increase is linked to higher volumes typically seen in the building and construction sectors during this season. Despite these fluctuations, feedstock butanol prices have remained stable, as indicated by trends in exporting nations.

Recent weeks have witnessed an improvement in demand from the downstream paint and coating sector, primarily driven by significant developments in the housing industry. Despite remaining weaker compared to the same period last year, there has been a notable increase in the average new home price across 100 cities. However, total sales by value among 100 real estate companies witnessed a substantial year-on-year decline in the first quarter of the year, indicating that a recovery for the sector may not be imminent. Additionally, demand for paint and coating remains robust in the automobile sector, further supporting healthy prices for MEK. As of 3rd May 2024, the assessed price for MEK stood at USD 1165/MT FOB Qingdao, reflecting a 5.9% increase compared to April 12th.

ChemAnalyst anticipates an upward trajectory in MEK prices over the coming months, propelled by anticipated enhancements in demand from both domestic and international markets The forecast is strengthened by the Chinese government's efforts to strengthen the construction industry, suggesting favorable prospects for MEK prices.