European MEK prices ease on influx from Asia, demand abates due to shutdowns

Author: Anne-Sophie Briant-Vaghela

2020/05/13

LONDON (ICIS)--European methyl ethyle ketone spot prices lost six percent this week due to longer supply and slower demand.

Prices slipped €100/tonne at the low end and €150/tonne at the high end with the range now at €1800-€2,050/tonne FD (free delivered) NWE (northwest Europe).

VlpnS1VjdkVtOUJ0TGttWFlCcVltZmFKVm5nPQ2Demand remains subdued on slow restarts after long shutdowns

Appetite for European methyl ethyl ketone (MEK) remains low  and is forecast to keep that way throughout May as upward momentum from sectors downstream is expected to take several weeks to materialise in the petrochemical industry.

Most distributors conceded activity was subdued due to outstanding shutdowns in the paints and coatings, resins applications servicing both the automotive and construction sectors. Those with applications in the printing inks sector servicing the food packaging industry were coming from a high in April with a slight slowing down of their demand.

This was somewhat offsetting the reduced levels of production at two out of three European producers. One major producer was still under force majeure.

Some producers have seen availability of feedstock secondary butyl alcohol (SBA) constrained at refineries due to lower demand for gasoline and jet fuels requiring adjustments on the C4 stream.

While Ineos has had some technical issues on its SBA-MEK production line in January and February this year, the issue has been resolved but the force majeure remains in place on reduced access to SBA, market sources said

At least one other European producer was heard having limited access to the feedstock.

On the other hand, imports relaxed the tightness seen in the first quarter and April.

Heightened influx of Asian product

A good part of the market was covered on imports, available at prices several hundreds of euros lower than the current prices on offer at European producers and distributors. The latter were willing to compromise volume for higher prices and fought back the downward pull.

Late last month, ICIS heard from market participants that an unusually important volume of MEK had left China for Europe in March, with one China-based trader mentioning 3,700 tonnes being shipped off Europe's way.

With an eight to ten week lead time, this would explain the current dynamic behind dwindling prices despite the reduced availability at Europe-based plants.

Although ICIS data on imports for March this year is not available yet and the indication could not be verified, the figure was in line with 2018 March imports which were estimated at 3,339 tonnes. Participants' feedback in the past few weeks on the stronger influx from China  due to the arbitrage window with the East reopening at the end of the first quarter, have abounded.

Deals on Asian product for prompt delivery were heard at €1,475/tonne this week, a price deemed at the high end of the spectrum for the region of origin.

MEK’s main application is as a low-boiling solvent, with half of global demand derived from the paints and coatings industry. MEK can also be used in rubber-based industrial cements, printing inks and in textile dyes.