July 31st, update
In July, China’s MIBK spot market followed a V-shaped trend, first declining and then rebounding. At the beginning of the month, the benchmark spot price in East China stood at 9,466.67 CNY/ton. Affected by weak demand during the off-season, ample supply, and insufficient cost support, the price continued to fall, reaching a monthly low of 8,700 CNY/ton on July 14. Mid-month, driven by rising prices of the raw material acetone, the market bottomed out and began to rebound, with prices climbing back to 9,450 CNY/ton by month-end—essentially recovering from earlier price declines. However, constrained by terminal demand, the overall market movement remained corrective rather than establishing a sustained upward trend.
First, downstream demand has entered the traditional off-season, leading to a decline in operating rates in industries such as tire compounding antioxidants and coatings. At the terminal end, buyers are only purchasing what’s strictly necessary, with no significant restocking efforts, resulting in sluggish market activity and a lack of transaction support. Second, on-site facilities are running steadily, and there is an ample supply of goods available, putting considerable pressure on traders to reduce inventories. As a result, traders are proactively offering discounts to move their stock, further exacerbating the downward price trend. Third, the upstream acetone market remains weak, loosening the cost floor for MIBK, and manufacturers show insufficient willingness to hold prices steady. Pessimistic sentiment is now dominating the market.
The core driver is the strong rise in the price of acetone, which significantly increases the production cost of MIBK, compressing industry profits and even leading to losses. Manufacturers' willingness to hold back from selling and support prices has greatly increased, completely reversing the weak market situation. At the same time, after the price fell to its lowest point of the year, traders and downstream buyers began to buy at low prices to replenish their inventories. This led to a recovery in market transactions and sentiment, ending the bearish trend and driving prices to steadily recover and rise.
This round of rebound is purely cost-driven and not a trend reversal led by a recovery in demand. At the end of the month, downstream consumption is still in the off-season, and terminals are cautious about purchasing at high prices, resulting in limited increase in transactions. Moreover, the overall supply in the industry remains loose, with no shortage of goods to provide support. Therefore, the extent of the market rebound is limited, and the overall situation is mainly characterized by fluctuation and recovery.
From a short-term perspective, the market is still primarily driven by cost-based pricing logic. It is essential to closely monitor the price trends of acetone, changes in MIBK plant operations, the recovery of downstream terminal operations, and the inventory changes at Chinese ports. At the same time, attention should be paid to the strength of the basis, the breakout of technical resistance levels, and these factors will help in assessing the sustainability of the market rebound and the turning point of market sentiment.
