HOUSTON (ICIS)--The US methyl ethyl ketone (MEK) market in the US are moving into a more balanced position in early 2018, following a tight second half of 2017.
MEK is not produced in the US, with the region relying on imports largely from Europe, South Africa and Asia. But production issues, natural disasters and high consumption in other regions limited MEK supplies into the US in the second half of the year.
In July, a fire and power outage at large refinery in Rotterdam tightened the European MEK market, increasing prices and limiting shipments to the US. Although the force majeure was resolved in about a month, the market remained tight into the fourth quarter when the region faced further production issues.
Meanwhile, US imports from South Africa also were limited as regional producer Sasol warned customers in August that it may limit sales. In September, the producer said it would limit customers to contract or target volumes, and those restrictions continued into December.
Material from Asia offered little relief, amid tightness during the second half of 2017 due to turnarounds, holiday-related outages and strong demand.
The US market also was impacted by Hurricane Harvey, which made landfall in the US Gulf in late August. Historic flooding from the storm impacted shipping systems in and around Houston, Texas, which is a hub for chemical shipments around the US.
US MEK prices rose in response to the global tightness and global price increases. However, the disruptions from Hurricane Harvey caused further tightness and price increases for MEK delivered across the US. Prices for MEK DEL (delivered) rose by about 40 cents/lb ($882/tonne) between July and December, while prices in the Houston area rose by about 23 cents/lb.
Shipping systems in the US normalised over the months following the hurricane. Trucking availability remained tight but had been tight prior to the hurricane. MEK supplies in the US began to loosen late in 2017, and prices for delivered material began to soften in December.
Heading into 2018, US MEK prices could continue to soften if supplies continue to loosen.
South African producer Sasol had been expected to lift sales restrictions by the end of 2017. While the MEK markets in Europe and Asia remain tight, the start of winter in North America may help balance the US market.
MEK is frequently used as a solvent in paints and coatings and can be used in rubber-based industrial cements, which are tied to the construction industry and have a seasonal slow-down during the colder winter months.
Slow demand may help keep the MEK market balanced early in 2018. However, increasing demand in the spring may again lead to tightness, depending on production levels in other regions and on imports into the US.
Major MEK producers include ExxonMobil, Shell and Sasol, though their plants are outside the US.