SunSirs: Geopolitical Tensions Drove Methyl Ethyl Ketone (MEK) Prices Up Over 18% in Five Days

Price trend

Under the influence of the macro situation, starting from March 1, the domestic price of methyl ethyl ketone (MEK) had shown a rapid step-by-step increase, rising from 7,000 RMB/ton at the beginning of the month to 8,300 RMB/ton, reaching a high point in the first quarter, with a cumulative increase of 18.57% in 5 days.

Key Influencing Factors

Macroeconomic Situation: Geopolitical Conflicts Dominated Costs

On February 28, Iran announced the closure of the Strait of Hormuz. The Strait of Hormuz carries about 20% of the world's crude oil and 30% of its liquefied natural gas trade. The closure directly led to a sharp rise in Brent crude oil prices. The cost of crude oil was passed on to the entire chemical industry chain. As crude oil is an upstream raw material for methyl ethyl ketone (MEK), the soaring price of crude oil directly pushed up the production cost of MEK.

On the supply side: Some methyl ethyl ketone (MEK) plants were undergoing maintenance or reducing production, resulting in a tight spot market supply. Leading companies had successively raised their MEK prices, driving up industry prices.

On the demand side: The traditional peak season of "Golden March and Silver April" coupled with the resumption of work and production in downstream industries such as coatings and adhesives, the recovery of the domestic macroeconomy, and the gradual release of restocking demand for methyl ethyl ketone (MEK) had provided demand-side support for the rise in MEK prices.

Market outlook

In the short term, given the ongoing geopolitical conflicts and high crude oil prices, methyl ethyl ketone (MEK) prices are expected to remain high, and there is even a possibility of further increases. In the long term, however, if geopolitical conflicts ease, crude oil prices fall, or downstream demand falls short of expectations, MEK prices may face the risk of a correction.

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