Supply Crunch and Demand Improvement, MEK Price Peaks in Netherlands
Supply Crunch and Demand Improvement, MEK Price Peaks in Netherlands

Supply Crunch and Demand Improvement, MEK Price Peaks in Netherlands

  • 04-Mar-2024 9:54 AM
  • Journalist: Shiba Teramoto

Rotterdam (The Netherlands): Methyl Ethyl Ketone (MEK) prices experienced a substantial surge in the domestic market of the Netherlands, primarily driven by increased supply disruptions in the Middle East. Concurrently, improved demand emerged from downstream construction and automobile industries, particularly in the paint and coating sector, further contributing to the upward trend in prices. Additionally, MEK production in exporting Asian countries faced interruptions due to the cessation of operations during the Seollal festival in South Korea and active stocking practices downstream, along with reduced logistics activities during the Spring Day festival in China. This combination of factors has resulted in a global shortage, amplifying the rise in MEK prices.

MEK prices in the domestic market of the Netherlands have seen a consistent upward trajectory in February, primarily fueled by robust demand in the automotive and construction sectors, coupled with supply disruptions in the Red Sea. The disruptions have created challenges in the supply chain. Escalating shipping costs, attributed to Houthi attacks, are compounding challenges for companies, raising concerns about global inflation. The Red Sea attacks are particularly impacting MEK transportation, causing delays and increased expenses for its shipment around Africa.

Concurrently, the Netherlands has witnessed a remarkable 64% surge in electric vehicle (EV) sales in January 2024, driven by government initiatives and the dominance of Tesla's Model Y. Notably, the MEK price surged from USD 990/MT FD Rotterdam on October 6th to USD 1840/MT FD Rotterdam on 16th February 2024 after the Middle East tension, marking an 85.5% increase. Additionally, Qatar's decision to halt LNG shipments through the Red Sea to Europe is further impacting production costs in the region.

On the construction front, there was robust demand in the downstream paint and coating sector, driven by the construction industry's increased activity. The surge in house prices and heightened sales of new constructions created a demand strain on existing MEK inventories. Despite higher prices, the housing market witnessed increased transactions, as reported by the national statistics agency CBS. Active procurement activities and positive market sentiments played a crucial role in maintaining robust prices.

Additionally, downstream industries' active stocking practices during the Seollal festival in South Korea and reduced logistics activities during China's Spring Day festival contributed to price stability. However, while the feedstock n-butanol remained stable, the rise in upstream crude oil prices impacted MEK production costs, influenced by Israel's rejection of a ceasefire offer, which raised concerns about the global oil supply.

After a substantial surge in MEK prices from October to February, anticipation of a decline in the coming months looms large, prompted by shipping companies opting for alternate routes amid global supply challenges.

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