Europe MEK prices up 16%, more tightening expected post-Aug

Focus article by Chris Barker

LONDON (ICIS)–As European methyl ethyl ketone (MEK) spot prices continue to rise on a tight market, players warned on Tuesday that the upward trend may accelerate post-August.

European MEK spot prices now stand at €1,375-1,450/tonne free delivered (FD) northwest Europe (NWE), an increase of around 16% compared to the 24 June range of €1,200-1,240/tonne FD NWE.
 
However, because this increase has occurred in August, which is traditionally a month of weak demand due to the peak holiday season, some market participants said prices could go even higher once more players return from vacation.

One UK-based distributor, which notes that it is on allocation, said: “[I have] very few molecules for the spot market. This week [I am] targeting £1,300/tonne FD (€1,628/tonne) – into September I reckon it will be a lot higher than that.”

“Once the holidays end, they [buyers] will suddenly say… what’s happened to this, we should buy some more material… I don’t think we’ve reached the top [as far as pricing is concerned].”

Another distributor concurred, saying: “[It is] going to get harder and harder to find reasonable pricing. There is probably a trader or importer which still has material but [it is] getting harder and harder.”

It added: “In September it will at least stabilise, or go up further, because there is hardly any material in the market.” 

Sources said the root cause of the tight market is American producer Exxon Mobil having limited material on the spot market, which has left Europe as a whole short of MEK.

Several other producers have also increased prices, with players saying that this is because of difficulty in coping with the unexpected demand.

Exxon is one of the biggest producers involved in the European MEK market, with players estimating that it supplies about a third of MEK used in the region.

The company declined to comment on the situation.

Sources said it is unlikely prices will begin to fall until availability improves, although some added that they expect this to occur once Exxon returns to the market.

A distributor said: “As soon as Exxon is back market prices will go down again – [there will be] more material in the market and demand isn’t fantastic. Even with the price rises it is really quiet.”

It is not clear where some buyers can turn to get material with the market so short. Earlier in August a trader said alternative sources of MEK are sometimes available via imports, although only if customers are lucky. It added prices are as high as €1,500/tonne FD NWE for some customers.  

“There is very little material on the market… demand is overwhelming,” it said.

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