Asia MEK prices rebound on higher feedstock costs

23 July 2012 08:09  [Source: ICIS news]

SINGAPORE (ICIS)--Asia methyl ethyl ketone (MEK) prices recovered from a near six-month low during the week ended 20 July following strong gains in the prices of benchmark feedstock naphtha, industry players said on Monday.

August shipment prices rose by $10.00-20.00/tonne (€8.30-16.60/tonne) to $1,230/tonne CFR (cost and freight) NE (northeast) Asia in a sign that the market may have bottomed out, they said.

Prices slumped by more than $200/tonne between April and the first half of July because of the weak downstream demand but a rebound in naphtha prices since the end of June has helped to boost the sentiment of buyers, they said.

“Buying interest has improved as importers do not see much price downside,” a regional trader said.

Some sellers are hoping prices will be supported by tighter supply in China where four facilities with a combined capacity of 130,000 tonnes/year are scheduled to shut for maintenance in the third quarter.

Lanzhou Petrochemical has already taken its 30,000 tonne/year plant in Gansu province off line on 7 July for about 40 days of maintenance, while another two 30,000 tonne/year plants in Jiangsu and Helongjiang provinces owned by Taizhou Petrochemical and Harbin Petrochemical will stop production in August for 50 days or more.

A fourth 40,000 tonne/year unit operated by Dushanzi Petrochemical in Xinjiang province will also shut next month for about two weeks for a catalyst change.   

However, buyers are less sanguine about the market outlook.

They said the price upside will be limited by the persistently low consumer demand and the availability of competitively-priced substitutes such as ethyl acetate (etac).

“Demand in southeast Asia will be slow until the end of August because of the Ramadan lull,” a southeast Asian distributor said, referring to the Muslim fasting month of Ramadan when routine business activity slows down.

($1 = €0.83)

By: Yeow Pei Lin

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