JAPAN DISASTER: Japan’s MEK shortage squeezes US supply - buyers

04 April 2011 22:11  [Source: ICIS news]

HOUSTON (ICIS)--US methyl ethyl ketone (MEK) supply was tight even before the outage at Maruzen Petrochemical’s 170,000 tonne/year MEK plant in Japan, sources said on Monday, but it is worsening.

Damage from a fire forced a shutdown of the plant in Chiba on the northeast coast of the island nation following the 11 March earthquakes and tsunami, tightening supply from Asia and forcing distributors and other buyers to enter the rising spot market.

The outage has put a squeeze on MEK supply, a US distributor said. “We are looking for bulk loads for a major customer of ours and having trouble finding anyone with available material.”

Another buyer said the catastrophe had clearly slowed shipments from Asia and would keep US MEK supply tight for the foreseeable future.

The dearth of MEK is also increasing demand for ethyl acetate, a substitute for MEK, especially in the production of inks and coatings, sources said.

Shortages in the US have recently driven up domestic spot truck and rail prices and lent support to proposed April contract price increases of 5 cents/lb ($110/tonne, €77/tonne), sources said.

Domestic sales controls were said to be in effect in the US, with purchases limited to historical volumes.

Spot activity was minimal so far, a US distributor said, but domestic spot market prices were heard up in the range of $1.05-1.13/lb, the latter end before discounts. One buyer said it was offered spot material for as high as $2.15/lb, as a trader sought to capitalise on the shortages.

Asian material also reached new highs as severe shortages there led buyers to raise their price ideas, but many suppliers had suspended discussions with buyers in the immediate aftermath of the storm. Tight prompt supply confined trade to small parcels in iso-tanks or drums, Asian sources said.

An Asian exporter of MEK from Maruzen said it was currently tapping spot volumes in Asia to supply customers in China, Taiwan, Indonesia and elsewhere. The exporter did not know when the Maruzen plant might be operational again, and consequently, how long it might have to - or even be able to - stay in the spot market.

US MEK suppliers include ExxonMobil, Shell and Sasol.

($1 = €0.70)

For more on MEK, visit ICIS chemical intelligence

 

By: Larry Terry
1 713 525 2653

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