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SunSirs: MEK Fell all the Way in July and Has Limited Room to Rebound in August

August 07 2020 08:08:52     SunSirs (John)

Price trend

According to the data monitoring of SunSirs, as of July 31, the average ex-factory price of MEK in the domestic market was referenced at 6,066.67 RMB/ton. Compared with the price on July 1, the price fell by 967 RMB/ton, a decrease of 13.74%; compared with the price on June 1, the price fell by 167 RMB/ton, a drop of 2.67%; the maximum amplitude from June 1 to July 31 was 40.11%.

The MEK market was "short-lived" in June, and the price quickly dropped after high prices

In mid-June, the MEK market experienced a brief surge, with an increase of 40.11%. The reason for the rapid price increase was mostly due to the tight stocks of MEK and the high prices of traders. However, market demand could not be effectively followed up. After the surge, the market price of MEK fell rapidly, and the market did not usher in an effective boost at the end of June.

In July, MEK continued its downward trend, and the market downturn hit the bottom all the way

Entering July, the overall downstream demand for MEK was not high, the enquiry atmosphere was not good, and the large number of shipping schedules arrived at the port, the market supply and demand contradicted. MEK continued to weaken and decline. In half a month, the price of MEK has fallen to 6,400 RMB/ton, a drop of 8.53% in half a month. The price has basically fallen to the safe price in the minds of the industry, and then the market stabilized for a short period of time, and then the MEK market fell again slightly. As of July 31, the average ex-factory price of MEK was referenced at 6,066.67 RMB/ton. Compared with July 1, the average price was lowered by 967 RMB/ton, a decrease of 13.74%, of which the low-end quotation had fallen to around 5,800 RMB/ton. The main reasons for the continued decline in the MEK market in July came from the following three aspects:

Hot weather, off-season is approaching, downstream demand is deserted

The high temperature in summer is the traditional off-season for MEK. Due to high temperature, environmental protection and other factors, the downstream terminal coatings, paints, adhesives and other industries have reduced operating hours. Therefore, they are greatly affected by the season and the weak downstream demand has not improved.

Restricted exports, foreign trade pressure affects domestic trade atmosphere

Affected by the intensification of foreign public events, export orders for MEK were significantly reduced in July. It is heard that some exporters have not received new export orders for nearly a week. Then the cold foreign trade market directly put pressure on the domestic market. Under the increase of domestic inventory, the industry's attitudes of bearishness increased, the domestic market continued to be deserted, and the mentality of traders in some regions collapsed and sold at low prices.

The raw material market has not improved, and the cost support is average

At the end of July, after the raw material ether, C4 demand improved, transaction prices rose slightly, but the market did not substantially improve. The end product market did not improve much, and prices fluctuated in response to news. Therefore, the cost was generally supported by MEK. The pressure on the secondary market of MEK is still relatively high.

Demand is difficult to boost in off-season. In August, MEK prices stabilized, with limited room to rebound

Based on the current situation, the pressure of supply and sales in the MEK market still exists in August, and the short-term improvement in domestic and downstream demand is limited. It is expected that the MEK market in August will be dominated by low prices and stable prices. It is not ruled out that under the strong desire of the industry, after the secondary market inventory is gradually digested, the price market rebounds slightly, but the demand side cannot be really eased, and the real rise may come later.

If you have any questions, please feel free to contact SunSirs with support@sunsirs.com.

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