Europe MEK prices hit new record high on supply constraints

04 June 2010 23:59  [Source: ICIS news]

LONDON (ICIS news)--European methyl ethyl ketone (MEK) prices have reached new record highs this week as a result of ongoing supply constraints, buyers and sellers confirmed on Friday.

MEK prices increased by €100-200/tonne ($122-244/tonne), depending on market, to €1,450-2,000/tonne FD (free delivered) NWE (northwest Europe), according to data from global chemical market intelligence service ICIS pricing.

Last month, prices hit €1,350-1,800/tonne – their highest level since ICIS pricing records for MEK began on 17 November 1999.

The previous high was €1,600/tonne, reported from 22 October to 5 November 2004.

The wide range of prices in the market was due to supply constraints, leading to erratic pricing, sources said.

“MEK is a real problem. Everyone is allocating material. It’s a disaster,” said one distributor.

Numbers at the top end of the range were representative of the distribution market, with producers reporting prices at €1,450-1,550/tonne.

Prices were dependent on customer relationships and promptness of material, players said. One distributer reported prices as high as €2,100/tonne, but this was not widely confirmed.

Tight supply was the result of recent production issues, according to sources, although the output problems were now resolved and suppliers had not yet been able to rebuild stocks amid strong downstream demand.

“We’re now rebuilding stocks following production problems. We’re playing safe as we don’t want to oversell,” said a major producer.

It was unclear when availability of material would improve, sources said, with some predicting that higher operating rates would improve supply by the end of June.

Others said they expected the market to remain tight until August, when the traditional holiday period would lower downstream demand.

“People were saying that supply would ease by the end of May. It has to happen at some point, but at the moment the supply situation is still the same. We’re still waiting for availability to improve,” said a distributor.

Supply was further tightened by an absence of imported material due to the strong US dollar against the euro, making overseas material unattractive to European buyers, players said.

Consumption was strong, sources said, as buyers attempted to ensure material.

A minority of sources noted that buyers in compatible downstream applications, such as automotives and printing, were switching to ethyl acetate (etac) as an alternative to MEK due to the lack of availability.

Sources added, though, that it was not possible to substitute etac for MEK for the bulk of downstream applications.

($1 = €0.82)

For more on MEK visit ICIS chemical intelligence
To discuss issues facing the chemical industry go to ICIS connect

By: Mark Victory
+44 208 652 3214

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