Lead-in: In mid-July, escalating US-Iran conflicts drove a sharp rise in international crude oil prices, which in turn pushed up feedstock C4 raffinate prices. The dramatic shift in costs quickly transmitted to the methyl ethyl ketone (MEK) market. Producers raised quotes consecutively, and holders' sentiment was bolstered as they followed suit with price increases, pushing market prices to the month's high. However, downstream end-users showed extremely low acceptance of high prices, and actual transactions were scarce, leaving the market in a state of nominal quotes with little real trading.
I. Under Cost Support, MEK Prices Rose Broadly
Since the start of July, the domestic MEK market has shown a trend of declining first and then rising. Supported by cost support, stable supply, and improved export orders, market prices climbed from the month's low to its high point. Yet downstream end-users' acceptance of high prices remained extremely low, with few actual deals concluded, again leaving the market in a nominal-price, no-real-trade state. Toward month-end, as high-priced transactions continued to be blocked and the rally in feedstock C4 raffinate prices moderated, some holders' sentiment loosened and they began offering modest concessions to facilitate deals. However, with downstream demand still weak, real transaction follow-through was sluggish and trading volumes were constrained.
II. Weak Transactions Highlight Pronounced Supply-Demand Contradiction
In July, MEK output and capacity utilization both rose modestly. Output reached 56,900 tons, up 9.85% month-on-month, while industry capacity utilization stood at 69.88%, up 4.16 percentage points from the prior month. The domestic MEK market maintained a pattern of stronger supply against weaker demand, with an overall loose balance. On the supply side, operating rates were expected to increase; on the demand side, downstream industries remained in the tail end of the off-season, making only small essential purchases of feedstock with limited appetite for concentrated restocking, and domestic trade volumes struggled to gain traction. On the export front, activity was primarily focused on delivering prior orders, with new inquiries made on an as-needed basis and slow follow-through, offering limited relief to domestic demand. Against this backdrop of strong supply and weak demand, the market lacked substantive positive catalysts to support prices.
III. International Prices Under Pressure, Export Support Weakening
European MEK market prices have recently trended downward. Affected by weak summer demand and competition from import supply, trading sentiment was subdued. The weakening of international prices narrowed the spread between domestic and overseas markets, gradually closing the export window and further eroding the export competitiveness of the domestic market. Combined with the absence of any notable improvement in market demand, local markets mainly digested existing feedstock inventories, and overall trading sentiment remained lackluster.
IV. Market Outlook
In summary, the recent uptick in MEK prices was primarily driven by cost-side factors, while downstream actual demand did not improve in tandem. Although prices hit new monthly highs, market transaction volumes did not expand. In the near term, as units in South China gradually resume operations, the MEK industry operating rate is expected to tick up modestly. Combined with steady arrivals of domestic vessel cargoes, spot supply overall remains ample. Downstream end-users have yet to show signs of recovery, with factories sticking to small essential purchases and showing clear resistance to high prices and insufficient purchasing capacity. While cost support limits the downside, the market lacks substantive positive drivers. MEK is therefore expected to remain in a weak, range-bound pattern in the near term, and follow-through on actual transactions will warrant close observation going forward.
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