Asia MIBK snaps 3-month decline; may gain further on restocking

Focus article by Angeline Soh

SINGAPORE (ICIS)–Spot methyl isobutyl ketone (MIBK) prices in Asia may continue to increase after snapping three months of decline this week because of post-Lunar New Year restocking activities, market players said on Tuesday.

Gains in upstream crude and acetone markets were also supporting MIBK prices, they said.

On 3 March, spot prices were assessed at $1,150-1,170/tonne CFR (cost and freight) China, up by $10/tonne from the previous week, according to ICIS data.

In China, buyers sought spot cargoes to replenish their diminished stocks over the Lunar New Year holiday (18-24 February).

But MIBK prices have yet to fully catch up with the strong gains in the acetone market as a number of downstream factories still shut, market players said.

On 27 February, acetone prices (on zero anti-dumping duty (ADD) basis, subject to 5.5% import duty) were assessed at $ 670-675/tonne CFR China, up by $30-40/tonne from 13 February.

In southeast Asia, acetone prices were at $700-735/tonne CFR SE Asia, up by $20/tonne at the low end of the range over the same period.

There was no price assessment in the week ended 20 February because of the Lunar New Year holidays in most parts of northeast and southeast Asia.

MIBK’s price increase could strengthen further after 5 March – the last day of the 15-day Lunar New Year period – as most downstream plants will have restarted then, market players said.

Meanwhile, prices of the material in southeast Asia also increased to $1,210-1,220/tonne CFR SE Asia in the week ended 3 March, up by $10/tonne at the low end of the range from the previous week, according to ICIS data.

Gains had been minimal partly on the weakness of regional currencies such as the Indonesian rupiah and the Malaysian ringgit against the US dollar.

Market players expect the price uptrend to be strong in the second half of March, when monsoon rains in some countries in the region, including Indonesia, start to subside.

Monsoon rains tend to dampen demand for tyres, paint and coatings – the major downstream sectors of MIBK.

Demand in southeast Asia should also increase further in the second quarter, ahead of Ramadan – the month-long Muslim fasting month that starts in July.

In Thailand, restocking activities are expected kick off in March ahead of a national holiday in the following month. The country will celebrate its own New Year holiday called Songkran on 13-15 April.

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