US MEK to face uncertainty tracking production issues, trade tensions

Source: ICIS News

2019/04/15

HOUSTON (ICIS)--US methyl ethyl ketone (MEK) prices will continue to face uncertainty for the remainder of 2019 as international concerns and production issues weigh on the market.

On average, MEK originating from the UK makes up about 30% of US imports, which makes Brexit an important topic for the US MEK industry.

Recently, EU leaders have allowed the UK to extend its leave date until 31 October.

While many producers increased their stockpiles prior to the original Brexit deadline, many of those stockpiles could now become depleted due to the extension and production issues in Asia.

Taiwan’s TASCO plant had originally announced a force majeure on its MEK production unit after its MTBE plant caught fire at the end of February and that the plant would be shut for a month, then three months. The latest heard from a source in China is that it is expected to start production again in early June.

Due to the prolonged TASCO outage and further maintenance turnarounds on the Zibo Qixiang plant (90,000 tonnes/year capacity) in Huangdao, China, from May to July, there may be further upward pressure on Asian prices, which could increase European exports to Asia, and lessen exports to the US.

MEK imports declined year on year and month on month in January, tracking continued international instability.

Trade issues stemming from the US-Chinese tariffs, as well as production issues in Asia, have contributed to the decline in exports heading to the US.

Price increase announcements are being separately sought amid the Asian production issues as well as the fire at a storage facility along the Houston Ship Channel.

MEK prices are currently assessed by ICIS at 66-64 cents/lb ($1,455-1,410/tonne) for spot ex-tank material.

ICIS Editorial Chart goes here

There is no MEK produced domestically. The US market is supplied by imports from Europe, South Africa, and Asia.

Major MEK producers include ExxonMobil, Shell and Sasol, though their plants are outside the US.

MEK is frequently used as a solvent in paints and coatings.

Click here to view related stories and content covering the ITC terminal tank fire incident and its impact.

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Focus article by Alex Snodgrass