APIC ’19: Asia’s MIBK H2 market outlook weak on longer supply

Author: Angeline Soh

2019/05/16

TAIPEI (ICIS)--Asia’s methyl isobutyl ketone (MIBK) market outlook in the second half is weak amid longer regional supply, according to market players on the sidelines of the Asia Petrochemical Industry Conference (APIC) 2019.

In the week ended 14 May, prices were assessed unchanged at $790-820/tonne CFR (cost and freight) China, and at $810-830/tonne CFR SE (southeast ) Asia – their lowest levels in more than three years.

Domestic prices in east China were at Chinese yuan (CNY) 7,100-7,200/tonne ex-tank, higher by CNY200-300/tonne week on week. It marked the first rise since ICIS launched the quote in March 2019.

Market players questioned the sustainability of the domestic price uptrend in China and the possibility of a boost in import prices.

A container ship at Nansha Port in China. (Source: Xinhua/REX/Shutterstock)

This was because MIBK’s regional supply had lengthened, with Kellin Chemicals starting commercial production at its 15,000 tonnes/year line in H1 May.

The line has been operationally ready since July 2018. The company delayed the start-up due to stringent environmental checks and amid poor margins, with import MIBK prices hitting a three-year low in May 2019.

MIBK is a solvent for resins used in the production of surface coatings, with the main solvent applications coming from transportation, refurnishing and marine coatings, construction coatings, wood coatings and metal coatings.

Market sentiment recently strengthened after import prices of feedstock acetone rebounded from a nine-year low.

Two other MIBK lines are operationally ready but have not yet started up.

New MIBK plants in China

Company Location Capacity (tonnes/yr) Start-up dates
Kellin Chemicals Zhangjiagang 15,000 H1 May 2019
Yantai Wanhua Yantai 15,000 Unknown
Zhuhai Long Success Zhuhai 15,000 Unknown

“We are keen to explore the possibility of importing Kellin’s MIBK, since its IPA volumes are also available here,” said a southeast Asia-based buyer.

Some players expressed a lack of confidence in feedstock acetone price uptrend sustainability, given the high inventory levels, thereby eroding optimism for the MIBK market.

“Usually MIBK prices follow acetone. If acetone prices are weak, it is difficult for MIBK prices to be strong,” said a northeast Asia-based distributor.

Kellin Chemicals is a subsidiary of Chinese petrochemical producer Feixiang Group.

APIC is being held in Taipei on 16-17 May.

Focus article by Angeline Soh