08 April 2011 23:59 [Source: ICIS news]
LONDON (ICIS)--European methyl ethyl ketone (MEK) prices have surged by up to €250/tonne ($357/tonne) this week because of heavy exports to Asia after the 11 March earthquake in Japan, sources said on Friday.
Spot prices were trading at €1,570–1,850/tonne FD (free delivered) NWE (northwest Europe), a rise of €20–250/tonne from last week. Numbers at the top end of the range were representative of the distribution market.
In terms of MEK, Japan produces approximately 15% of worldwide and 60% of Asian supply, according to market estimates. Following the disaster in the country MEK production has been shuttered, which has led to a surge in Asian pricing in the past two weeks and siphoned material from Europe to Asia.
According to European MEK players, all spare distribution volumes are now being exported to Asia in order to take advantage of attractive margins. European producers are also receiving Asian requests and export volumes are expected to increase in the next few weeks.
“There’s energy behind it [MEK]. It’s all based on Asia. But they [traders] need to be careful or they’ll kill it off. Some will start substituting for other chemicals,” a buyer said.
Some players reported European prices as high as €2,200/tonne, which would be a new record high, but this was not seen as reflective by the majority of the market. European supply is tight because of the drain of material to Asia.
"There’s hardly any molecules, it’s all shipping out to Asia. One producer is putting all its customers on allocation to ship to Asia,” a trader said.
Exports to Asia had been expected to increase after the 11 March earthquake, but prior to this week material had not begun to be shipped.
In Asia prices surged a further $100–500/tonne this week, to $2,500–3,100/tonne CFR (cost and freight) NE Asia (northeast Asia), because of severe supply shortages following the Japanese earthquake. In the four weeks since the disaster, prices have increased by up to 77%. Prior to the earthquake, Asian MEK values were trading at $1,720–1,750/tonne CFR NE Asia.
The earthquake and tsunami in Japan damaged the region’s largest plant, Maruzen Petrochemical’s 170,000 tonne/year facility in Chiba, leading to panic buying. The plant is expected to remain off line for more than a year.
($1 = €0.70)
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