SINGAPORE (ICIS)--Asia’s methyl ethyl ketone (MEK) market sentiment is bullish on expectations of improved demand amid limited availability of spot cargoes in the near term.Methyl ethyl ketone (MEK) is mainly used as a low-boiling solvent, which goes into paints and coatings. (Photo by Chameleons Eye/REX/Shutterstock)
- Tight supply in some parts of southeast Asia
- Demand likely to pick up in Q4 across all regions
- Some importers looking to stock up on inventories fearing short supply
Offers in the week ended 28 September were limited, most of which came from Chinese traders as major suppliers were sold out for October.
Spot prices were assessed last week as stable at $1,180/tonne CFR (cost & freight) NE (northeast) Asia; $1,175/tonne CFR SE (southeast) Asia; and $1,175/tonne CFR India, according to ICIS data.
Over a two-month period, spot prices in northeast and southeast Asia have increased by 12.4% and 9.3%, respectively, the data showed.
In India, MEK prices increased at a comparatively modest rate of 3.1% over the same period because of the monsoon and influx of cargoes from Europe.
India’s long supply of the material during the monsoon season eased as demand gradually picked up at the end of September, ahead of Hindu holidays in the fourth quarter.
Importers in the country, however, were not in a rush to buy as they have sufficient MEK inventories and have to offload previously procured material.
Supply was tight in some parts of southeast Asia, with some suppliers holding on to their low inventories, reluctant to sell to downstream manufacturers.
“Demand is normal in Vietnam, but suppliers are very unwilling to sell on very tight supply,” said a trader.
Demand-wise, southeast Asia has yet to see a pick-up. However, with buyers sitting on almost non-existent inventories, suppliers were expecting a flurry of restocking to occur soon.
“Domestic demand is comme ci comme ca, but the trend is going up,” said a southeast Asian trader.
In northeast Asia, demand was expected to improve from October, after the Cheosuk holiday in South Korea on 23-25 September, and the week-long National Day holiday or Golden Week in China on 1-7 October.
Importers in northeast Asia would likely stock up on their inventories, fearing that supply would be short during the last quarter of the year because of the "blue-sky" policy in China.
In accordance with the blue-sky policy in China, MEK plants would have to reduce their operating rates; and some smaller plants would even shut during the winter period because of the regulation on coal emissions. Coal is one of the raw materials in producing MEK.
Focus article by Yuanlin Koh