HOUSTON (ICIS)--The US methyl ethyl ketone (MEK) market is facing pressure from the uncertainty surrounding Chinese tariffs, while the US isopropanol (IPA) market faces downwards pressure from falling propylene values, industry sources said heading into this year’s International Petrochemical Conference (IPC).
US MEK prices have faced uncertainty through most of early 2019 as import pressure from Chinese tariffs weighed on the market as well as Nouryon announcing that it had begun production at its new methyl ethyl ketone peroxide (MEKP) product lines in Pasadena, Texas.
Imports of MEK originating from China have been steadily declining since the announcement of the tariffs, but market participants expect these imports to pick up as it seems that the tariffs have been halted from their increase to 25%.
Market participants expected the coming spring season to help buoy demand, but many say the market is depressed as the US-China trade tensions continued to create a dampened atmosphere.
There is no MEK produced domestically. The US market is supplied by imports from Europe, South Africa, and Asia.
MEK is frequently used as a solvent in paints and coatings and can be used in rubber-based industrial cements, which are tied to the construction industry and have a seasonal slow-down during the colder winter months, but can see a bump in the warmer weather of spring when home-buying, new home construction and home remodel and repair projects increase.
Major MEK producers include ExxonMobil, Shell and Sasol, though their plants are outside the US.
In the IPA markets, pricing has been relatively steady but faces downward pressure from falling feedstock propylene values.
Propylene is a primary feedstock for US IPA and often a leading driver of prices.
“I think we may see some action here in the second half of the month,” one market source said in regards to IPA prices for March.
Falling propylene values could indicate the direction for March propylene contract settlements, as contracts typically follow that month’s spot pricing.
Market participants describe supply and demand for IPA as balanced, although they have seen an uptick in demand from the de-icing sector as extreme cold has plagued parts of the country, particularly the northeast and Midwest.
IPA is a solvent principally used in industrial and consumer products including cosmetics and personal-care products, de-icers, paints and resins, pharmaceuticals, food, inks and adhesives
US IPA suppliers include ExxonMobil, Dow Chemical, LyondellBasell, Monument Chemical and Shell Chemical.
Focus article by Alex Snodgrass