US MEK climbs again, up 25% since January

HOUSTON (ICIS)–Domestic prices for US methyl ethyl ketone (MEK) continued its climb on Friday, hitting its highest levels in more than two years as sources indicated that increases by producers had found traction in the market.

Domestic prices for MEK increased to 95-97 cents/lb ($2,094-2,138/tonne). The last time MEK prices were that high was in May 2012, when it hit 97 cents.

In 2014, MEK prices have risen 25%, from 77 cents/lb in January to 97 cents/lb.

Meanwhile, the MEK increases have finally hit the spot market. MEK spot material rose 5-cents this week, to 84-86 cents/lb.

ExxonMobil and Sasol had sought 5-cent increases for September.

As to what is driving these increases, sources have cited feedstocks and demand.

Ethylene prices have continued to increase. Also, while MEK is heavily used in the paints and coatings industry, its secondary use is in fibreglass. Fibreglass has seen increased demand this year, sources said this week.

Buyers said on Friday that MEK is likely to hit a ceiling very soon.

“A lot of people are spending luxury dollars on boats and jet skis and other luxury items,” the source said. “Those items are built with fibreglass. [But], at some point, MEK is going to flatten and go the other way. When you’re talking about contracts close to the dollar range and spot prices at about 85 [cents/lb], that won’t last. If the economy was completely booming, I’d say sure. But the economy is just doing OK. At some point, MEK will come down.”

No one is sure when it will come down. Some speculated this week that the slowdown in Asia will prompt more material to be shipped to the US, slowing the market here. However, higher ethylene costs could keep pressure on prices.

Major suppliers of US MEK are ExxonMobil, Dow Chemical, Sasol and Shell.