MEK Prices Rise in China Due to Increase Downstream Demand After the Lunar New Year

The market value of Methyl Ethyl Ketone (MEK) increased in the Chinese market, with prices costing USD 1270/ton FOB Qingdao as per ChemAnalyst Research Team Data during the first week of February. The procurement of MEK is good globally amid wider economic constraints. The traders' pre- and post-production MEK stocks declined faster than expected due to rising consumer demand.

Each segment of MEK continues to rise in price as the market recovers and opens after the Chinese New Year. This year's global operating rate is forecasted to be at 79% versus the average annual operating rate of 86%, which puts cost pressure on the product's price. Lockdowns in China and labor strikes at ports throughout the world increased the overall time to transit cargo. China lifts Southeast Asia factories as the Europe downturn softens and the region becomes more optimistic about the boost from China's reopening.

Although, over the week, the logistic industry has dropped 1% in the region, and freight charges seemed to rise by 0.4% from China to the USA, affecting the market sentiments. Logistics companies' earnings have increased by 17%, and more sales are being generated; therefore, profits have increased as well. The procurement of MEK from downstream lacquers and adhesives market seemed to be increasing, putting demand pressure on the product's prices.

The MEK downstream industry is trading at a price-to-earnings ratio of average value keeping the prices at a high range affecting the market sentiments. China's shipping container congestion is set to reflect repositioning to Asia. An uptick in prices of MEK and leasing rates of second-hand containers in China reflects how container traders and operators expect a resurgence in demand following China's reopening. This repositioning of containers back to Asia from the US and Europe reflects the clearance strategy by importers after the peak season.