17 September 2012 08:42 [Source: ICIS news]
MEK prices have already surpassed first-half June levels to close at $1,325/tonne (€1,007/tonne) CFR (cost & freight) northeast (NE) Asia in the week ended 14 September, according to ICIS pricing data and players are expecting prices to increase further if the costs of naphtha remain at high levels.
“Naphtha prices have stayed at high levels for more than a month. We will have to raise prices in order to maintain our current production rates,’’ a northeast Asian producer said.
Naphtha is the benchmark feedstock for MEK, which is used to produce paints and coatings.
Based on naphtha prices at $990-995/tonne CFR Japan on 17 September, the MEK-naphtha price spread is less than the $400/tonne level normally required by MEK producers.
This has prompted producers to target prices at $1,300-1,340/tonne FOB (free on board)
Their distributors in
“We can consider only a small price increase of around $10-20/tonne unless we can increase our domestic prices further. Demand is still very slow,’’ said a South Korean distributor.
Importers in South Korea, which is a key Asian market, said the domestic consumption did not see any seasonal pick-up in September so far, and they are hoping that end-users and dealers will restock prior to the 29 September-1 October Chuseok holiday.
In the broader Asian market, distributors said they are worried about booking high-cost cargoes because of the availability of more competitively-priced substitutes such as ethyl acetate (etac).
In the printing ink and paint industries, for example, some end-users will consider switching to etac when the prices for etac are $200-300/tonne lower than those for MEK, a distributor in southeast Asia said.
Etac prices were at $980/tonne CFR SE Asia in the week ended 14 September, or about $380/tonne below the prices of MEK in southeast Asia in the same week, according to ICIS data.
Meanwhile, most of the MEK producers in northeast
“If the margins do not improve, producers will prefer to delay restarting their plants and divert their feedstock to more lucrative products,’’ a Chinese producer said.
($1 = €0.76)
Read John Richardson and Malini Hariharan’s blog – Asian Chemical Connections
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