Asia MEK falls to 11-week low; bearish sentiment persists

Methyl ethyl ketone (MEK) spot prices in Asia have declined by around 17-19% over 11 weeks on the back of perpetual high inventory levels, with bearish sentiment expected to prevail in the coming weeks.

Data on 7 June showed prices at $965/tonne CFR (cost & freight) NE (northeast) Asia, $990/tonne CFR SE (southeast Asia), and $980/tonne CFR India.

These prices fell from highs of $1,190/tonne CFR NE and SE Asia and $1,175/tonne CFR India on 29 March.

Consumer sentiment in the region is seeing no sign of improvement amid the prolonged US-China trade spat.

MEK’s main application is as a low-boiling solvent, with half of global demand derived from the paints and coatings industry.

This is particularly apparent in the Chinese domestic market, where downstream manufacturers have been buying on a hand-to-mouth basis, in what is supposed to be the peak demand period for solvents.

Consequently, Chinese suppliers have been trying export to more material out to the rest of Asia, with very little result.

"Downstream users only buy on a need-to basis nowadays." a southeast Asian importer said.

Market players in Asia agreed that buyers in their domestic markets were also reluctant to stock up on their inventories, amid a general fear of an economic downturn.

Importers/traders were not interested in bulk MEK material, even with attractive offers from suppliers.

A bulk offer late on 10 June was quoted at $930/tonne CFR SE Asia for H1 July loading.

Producers and traders remained broadly open to revising down their offers amid ample supplies.

Market players are hopeful of a positive turn in market sentiment late this month.

US President Donald Trump and China President Xi Jinping are supposed to meet to resolve their trade dispute during the G20 summit in Osaka, Japan, on 28-29 June 2019.

Other market players were not so optimistic of a positive outcome in the US-China talks.

"It would still be the same old story, with tensions unsolved." said a Chinese trader.