US MEK prices hit highest levels in two years

HOUSTON (ICIS)–US methyl ethyl ketone (MEK) prices increased 5 cents/lb ($110/tonne) on Friday, climbing to their highest levels in two years.

MEK domestic prices climbed to a range of 91-93 cents/lb after multiple sources indicated that price increases by producers were accepted in the market.

“It’s up,” a buyer said. “There’s no backing down from it. Everyone’s on allocation or on sales control and they’re sticking to it. Brokers can’t get enough product. It’s been tight for months.”

Another buyer confirmed that the increases had taken hold in the market.

“All suppliers still claiming solid demand and no relief,” the source said.

The last time MEK reached these levels was August 2012, when domestic prices hit 91 cents/lb. Prices then began to fall, plummeting to 77 cents/lb in early 2014.

Since May, however, MEK prices have begun climbing again, increasing 13% in four months.

The question in the MEK market: what is causing the increase?

Supply and raw materials appear to be the culprits. Ethylene prices over the last few months are up. Sentiment in the market has been that a producer of MEK was no longer producing it in the US. Instead, the producer is importing it from other regions, creating delays and tightening supply.

Demand for MEK – which is used primarily in plastics, textiles and as a paint remover – has been firm, but steady, sources said.

Sources said Friday that they were not sure if MEK prices would climb higher. They did say, however, that – just as in 2012 – the market is likely to correct itself.

“This happened before,” a source said. “MEK went way up, and it came crashing down. I don’t think it’ll get much higher. But we’ll see.”

Major suppliers of US MEK are ExxonMobil, Dow Chemical, Sasol and Shell.