ASC: Global markets impact US MEK contracts

Adhesives producers looking to buy US methyl ethyl ketone (MEK) are seeing lower prices as the market continues to correct from record-high prices in 2014. In 2014, the question on everyone’s mind was: how high will MEK climb? In 2015, the question is: how low will it go?

Prices in December 2014 climbed to their highest levels in three years, due mainly to production problems in Europe and increased demand in the US. As a result, some US buyers began purchasing material from Asian suppliers.

This has not proved to be a major move, however. MEK imports saw a slight increase in January, with imports rising 17% year on year, according to latest data from the US International Trade Commission (ITC). Imports from China nearly tripled, to 1,417 tonnes from 376 tonnes in January 2014. Imports from Taiwan also saw gains.

MEK buyers stand to benefit as US MEK suppliers have responded to the threat of competition by dropping prices by 20% since January. Indications are that prices could soften further.

In response to the lower prices, some MEK buyers have purchased at the lower rates, mainly on an as-needed basis, but many are choosing to simply wait and assume that the market will continue to correct and that prices could get even lower.

Demand for MEK in the second quarter is expected to remain steady to strong. MEK is also used in the fibreglass industry, where demand increased in 2014 due to more people buying high-end boats.

Furthermore, the US construction industry also drives some MEK demand and a strong home buying season could also push this up further.

Even with that increased demand, MEK prices will likely continue on the downwards correction they have been on for most of 2015.