FocusAsia MIBK may extend gains on tight supply, firm feedstock

06 March 2012 06:25  [Source: ICIS news]

By Trisha Huang

MELBOURNE (ICIS)--Spot methyl isobutyl ketone (MIBK) prices in Asia may continue to rise on the back of tight supply and stable-to-firm upstream acetone values, market sources said on Tuesday.

Prices of spot cargoes into China rose to about $1,760/tonne (€1,338/tonne) CFR (cost and freight) China this week, representing a 10% increase since early January, according to ICIS data.

Regional MIBK producers have been hiking prices to keep up with a steady increase in their feedstock costs.

Tight supply in the domestic Chinese market and a further strengthening in the prices of feedstock acetone have lent support to regional MIBK makers’ progressively higher price targets.

Fresh offers from Japan have increased to $1,770/tonne CFR China for end-March shipment.

“MIBK may reach $1,770-1,780/tonne CFR China in the near term. However, we foresee buyer resistance to prices above $1,800/tonne CFR China,” a trader said.

“Higher-than-usual” MIBK prices may encourage end-users in the paint and solvents sectors to substitute MIBK with lower-priced solvents, such as butyl acetate (butac), the trader added.

Upstream acetone prices on a zero antidumping duty (ADD) basis, while subject to a 5.5% import duty, have gained nearly 7% since early January to close at an average of $1,067.50/tonne CFR China for the week ended 2 March, ICIS data showed.

Supply of MIBK in the Chinese market, which imported just over 20,000 tonnes in 2011, has tightened because of the prolonged shutdown of a 20,000 tonne/year MIBK plant at Taizhou in Jiangsu province. The plant was taken off line before the Lunar New Year (22-28 January) because of feedstock supply issues, and no restart date has been set, said a company source.

In northeastern China, Jilin Petrochemical, which operates a 15,000 tonne/year line, is trimming its monthly sales volume by about 200 tonnes in the lead up to a plant overhaul between 26 May and 4 July. The major turnaround is carried out by Jilin Petrochemical once every four years.

“Supply has been tight for several weeks,” said a Chinese end-user. “We’re running our production at full tilt and have to supplement [our MIBK feedstock] with spot import.”

Domestic Chinese MIBK prices increased to (yuan) CNY14,100-14,200/tonne EXW in east China this week,  from CNY13,200-13,300/tonne EXW in early January, driven by limited spot availability and progressively higher acetone values.

“I would not say prices are going up because of strong demand,” said a Chinese MIBK maker.

“MIBK prices have risen really because acetone prices have been strengthening, and [the extended shutdown of the Taizhou plant] has curbed supply.”

Consumption of MIBK by the key rubber chemical and tyre sector, which accounts for 40% of China’s MIBK demand, has returned to levels before the Lunar New Year holiday in late January, Chinese producers said.

However, demand for MIBK from the automotive, shipping and furniture coating industries remains slower than expected, the producers said. 

Meanwhile, scheduled turnarounds at two regional MIBK plants are expected to exacerbate the tight supply in China this month.

Kyowa Hakko Chemical’s 15,000 tonne/year MIBK plant in Yokkachi, Japan, is currently shut for maintenance. The plant, which is expected to be down for 40-45 days, will resume operation around 20 April, a company source said. However, the company is not a regular MIBK exporter.

In Taiwan, LCY Chemical plans to shut its 20,000 tonne/year MIBK plant in Kaohsiung from around 20 March for approximately three weeks of maintenance, a company source said.

South Korea's Kumho P&B Chemicals said it has no plans to offer MIBK cargoes for exports in the coming months as it needs to beef up its inventories ahead of its three-month shutdown from early September for a capacity expansion and plant overhaul.

“We expect [MIBK] prices to continue going up this month, and possibly into April, because there are no indications that the current supply-demand situation will change in the near term,” a second Chinese MIBK manufacturer said.

($1 = €0.76)

Read John Richardson and Malini Hariharan’s blog – Asian Chemical Connections

By: Trisha Huang

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