Price and market trends: US MEK producers seek 5 cent/lb price hikes

11 August 2014 00:00 Source:ICIS Chemical Business

US methyl ethyl ketone (MEK) prices are up 13% in four months, and tighter supply and higher feedstock costs could push prices even higher, according to market sources. Europe MEK prices are also surging on low availability.

Several US MEK producers made 5-cent/lb ($110/tonne) MEK announcements the week ended 1 August. Buyers indicate the increases have a strong chance of acceptance. If they are, it would be the third MEK increase in four months. MEK domestic prices are currently up 13% from May, according to an ICIS analysis.

US MEK

“It’s tight enough, I could see it go through,” a buyer said of the MEK increases. “I think the market is going to start off considering full acceptance (of the 5 cents) and go from there. But, we’ll see what happens mid-month.”

MEK domestic prices have increased 10 cents/lb since May. MEK spot prices have gone up 4 cents/lb during that time.

PRICE NOMINATIONS

ExxonMobil and Sasol made separate 5-cent price increase nominations for mid-August. In addition, Sasol announced a planned shutdown of its MEK plant in Secunda, South Africa, and will put MEK on 100% sales control for the next several months. The company had previously announced a 100% sales control for July and August.

Sasol runs a 65,000 tonne/year plant in Secunda, according to the ICIS Plants and Projects database.

Sources said on 1 August that higher ethylene costs are likely the culprit for the MEK increases. Production problems by US-based MEK producers also were heard.

Another source said that MEK demand was strong for July, but that they had seen a slight softening in MEK demand compared to June. The source said that this could possibly be an outlier.

US domestic prices for MEK are 86-88 cents/lb. Spot prices for MEK are 79-81 cents/lb.

Low availability is continuing to drive up European MEK prices, market sources said on 4 August.

Prices as high as the mid-€1,400s/tonne free delivered (FD) northwest Europe (NWE) have been quoted by several players. The prior week, MEK stood at €1,300-1,340/tonne.

The spike is being driven by low availability from producers, with ExxonMobil widely reported to be short of material in Europe, and as many as two other major producers also suffering from limited availability on the spot market.

A distributor said: “[Producer] are supplying allocation to regular customers but not to the spot market. [Another producer] are very tight; they are not looking to participate in the spot market – they’re really keeping the product under lock and key.”

One producer said it has announced major price increases for this month. It attributed the firm pricing to low availability and relatively strong downstream usage for the quarter. “Demand has picked up a bit… I think for the last month people have struggled to get the volumes they need,” it said.

By Andrew Guy Jr