OUTLOOK 18′: Historically high Europe MEK prices may fall in 2018

LONDON (ICIS)–European methyl ethyl ketone (MEK) spot prices are relatively high in historical terms, leaving them with room to fall in the first quarter (Q1) although over the entire year the outlook is stable to bullish.

European MEK prices have been relatively high for most of 2017, with average Q1-Q3 levels more than 74% higher than those in 2016.

Prices for most of Q4 also showed only a small downwards trend, with prices remaining considerably higher than those in 2015/2016.

The most comparable year for 2017 in terms of pricing was 2014, which also saw significant tightness in Q4 because of production issues at Shell’s Moerdijk plant.

The average MEK price decrease from Q4 to Q1 2008-2016 is 9.1%, with average prices falling or remaining mostly stable in all but one year (although with a wide variation in price changes of almost 37%).

Together with the current high spot price, this suggests that MEK has further room to decrease in the short-to-medium term.

(2017 price excludes Q4 numbers)

However, over the longer term, there is a strong outlook for demand and feedstocks in 2018, which portends an overall stable or firm outlook for MEK, assuming similar conditions prevail.

The outlook for downstream demand is positive overall due to strong growth predictions for the European economy, with the main downstream sectors for MEK – paints, coatings and solvents- being driven by overall trends in GDP.

The European MEK market is mature, with no new plants or capacity expansions planned on the horizon. Imported MEK shipments have played a major role in the European market in 2017, particularly during periods of price spikes such as during Shell’s force majeure in August.

Asian MEK traders and producers’ interest in Europe as a market was piqued from 2015 onwards, due to the volatility of European prices and specifically the frequent spot price spikes, which often open up arbitrage between the two regions.

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