Asian MEK Prices Meets Uncertainties Amidst Low Demand in September 2024

In September 2024, the price of Methyl Ethyl Ketone (MEK) in Asia continued its downward trajectory due to weak demand and high inventory levels. The Chinese market, a key player in the region, saw a decline in MEK prices as sluggish demand from the downstream paint and coating sectors, particularly impacted by a slowdown in construction activities, exacerbated market conditions. The falling cost support from feedstock butanol added pressure, as butanol prices dipped significantly in East China due to oversupply and weak demand in the plasticizer industry. Moreover, the broader Asian market saw crude oil prices decline throughout September, driven by concerns over global demand and increased oil supply from Libya. This dragged down the export prices of petroleum-based products, including MEK, keeping its production costs low.

Further compounding the situation were ongoing trade tensions and barriers, such as U.S. and European tariffs on Chinese goods, which had a knock-on effect on China's MEK exports. Trade restrictions imposed by other Asian countries, such as India and Malaysia, on Chinese plastic products also curtailed the demand for MEK in the region’s downstream sectors. Despite China's efforts to boost its domestic market, weak domestic demand driven by the housing market slump and rising job insecurity further strained MEK market dynamics. Further, China's manufacturing remained below in September, with subdued export orders and delays in supplier logistics contributing to higher inventories of both raw materials and finished goods.

In India, the MEK market followed a similar downward trend, with prices declining due to oversupply and weak demand. The construction industry, a major consumer of MEK, faced significant disruptions due to heavy rainfall and flooding across key regions, stalling numerous housing projects. This led to a substantial reduction in demand for MEK in the paint and coating sectors. Meanwhile, the Indian manufacturing sector experienced a dip, with the subdued new orders and procurement activities. Excess inventories of raw materials and finished goods, along with delays in outbound shipments, further weakened market sentiment.

Overall, the MEK market in Asia remained bearish throughout September, with weak demand from the construction and coating sectors, low butanol prices, and falling crude oil prices keeping the market under pressure.  As per the ChemAnalyst, the holiday closures during the golden week, will reduce production activities, keeping inventory levels high and suppressing any upward price movement. Additionally, with limited transactions expected during this period, MEK market sentiment is likely to remain subdued, further preventing any significant price recovery in the near term.