LONDON (ICIS)--European methyl ethyl ketone (MEK) spot prices have spiked following a force majeure declaration at Shell's Pernis plant in the Netherlands, with some offers more than doubling, sources said on Tuesday.
Some European traders have floated price offers of over €3,000/tonne FD (free delivered) NWE (northwest Europe) due to the tightening market, making them more than twice as high at the average ICIS price of €1,460/tonne FD NWE last week.
"It's gone berserk, you can't get [MEK] for love nor money... [Offers are] €3,500 FD," one distributor said.
"Everyone is screaming for material... For MEK, traders wouldn't sell below €3,000-3,500/tonne FD," another distributor said.
"I didn't get a straight no [for that price] so I would guess most people with no contracts can't get material. In order to get material [they] will pay more or less anything," it added.
MEK spot prices are volatile because there are only a small number of producers remaining in Europe, leaving the market vulnerable to price spikes due to production issues.
Shell's Pernis plant has more than 25% of nameplate European MEK capacity, with the force majeure declaration seriously squeezing availability in the region.
At least one other European producer is also said to have limited MEK availability at the moment, although this could not be confirmed.
Shell did not comment on its production or force majeure status at Pernis.
As yet, it was unclear whether the highest prices floated would translate into sales in the market.
One UK-based trader noted that sellers were offering prices at £2000/tonne FD UK or more, but added: "[This is] a false number because there is no material [available]."
Sources were also uncertain as to how long the production shutdown might last.
Shell's initial announcement noted that units at the Pernis plant would be shut down for the first half of August; however, market players were pessimistic about the problem being resolved quickly.
"The first possibility was in the second half of month... [It's now] more likely to take a longer than a shorter time," a trader said.
"Some European trading companies said that the price will come down at the end of this month when Shell will resume production, whilst [other companies] think that the price will go up to €2,000/tonne FD," another trader noted.
MEK spot prices had been assessed at €1,450-1,470/tonne FD NWE in the week ending 6 August 2017.
On Tuesday afternoon, a spokesperson for Shell said the company was currently "restarting a number of units" as part of the phased restart of the Pernis complex.
However, it did not specify potential restart dates after previously stating it would occur "at the earliest" in the second half of August.
"Complete restart will take place in a structured and controlled way. Flaring and noise will be part of re-commissioning," the Shell spokesperson said.
MEK spot price 3-year chart
Pictured above: oil tanks at Shell's Pernis refinery
Source: Hollandse Hoogte/REX/Shutterstock
Additional reporting by Jonathan Lopez
Follow Chris Barker on Twitter