SunSirs: Driven by Geopolitical Factors, the MEK Market Experienced a Unilateral Surge in March

Price trend

In March 2026, driven by geopolitical tensions and a confluence of other factors, domestic market prices surged unilaterally from 7,000 RMB/ton to 14,866.67 RMB/ton—a monthly increase of 112.38%.

Analysis of Key Influencing Factors

Macro and Cost Aspects: The convergence of raw material and energy factors was driving a rigid upward shift in costs.

The prevailing production method utilizes the oxidation of C4 fractions (n-butane/butenes); given that raw material costs constitute a significant portion of total expenses, the surge in upstream feedstock prices during March—which caused the cost line to shift upward substantially—had served as the fundamental underpinning for the current market rally.

First, driven by geopolitical conflicts in the Middle East, international crude oil prices surged significantly. This upward trend had triggered a synchronous spike in the prices of naphtha and C4 components (LPG, n-butane, and butene); consequently, the rising raw material procurement costs for domestic enterprises had directly pushed up the baseline production costs of their products.

Due to excessively high raw material procurement costs, some enterprises were facing a situation where "production equals loss," prompting them to voluntarily reduce operating loads or halt production. This had further diminished effective market supply, creating a cyclical pattern of "rising costs → reduced production → tightening supply → further price increases."

With raw material prices surging significantly and corporate profit margins constrained, companies were compelled to passively raise ex-factory prices to pass on costs. This rise in costs was transmitted directly and rapidly to the end market, serving as a "hard support" for sustained price increases.

Supply and Demand: Contracting supply coupled with the release of demand amplified the impact of rising costs.

Supply Side: Domestic mainstream production facilities experienced reduced overall operating rates in March—driven by insufficient raw material supplies and routine equipment maintenance—resulting in a contraction of available market supply. Compounding this situation was a slowdown in import replenishment; furthermore, international logistics were disrupted by geopolitical tensions, leading to generally lackluster import performance. Prior to the Lunar New Year, enterprises actively engaged in inventory destocking, leaving social inventory levels at a low point by early March; the subsequent rise in production costs and tightening of supply further amplified market anxiety.

Demand Side: Driven by the resumption of operations during the peak season and restocking to meet essential needs, downstream industries—specifically coatings, inks, and adhesives—had entered their traditional busy season. With work and production gradually resuming throughout March, procurement volumes had increased; the steady flow of orders for essential requirements was providing a certain level of support to prices.

Market Outlook:

The fundamental driver behind the current surge in prices is a systemic escalation in costs. This effect has been amplified by a contraction in supply, a concentrated release of demand, and a supportive macroeconomic environment—culminating in a one-sided upward trend that saw monthly gains exceeding 110%. Elevated cost levels remain the core support for the market outlook; however, as raw material prices fluctuate, supply recovers, and the peak demand season concludes, the market will gradually transition into a phase of rebalancing between costs and the forces of supply and demand. SunSirs forecasts that while future market prices for MEK may continue to rise, the overall magnitude of the increase is expected to be limited, with prices primarily fluctuating within a high-level range. Specifically, key factors to monitor include crude oil price fluctuations, the operational status of production facilities, and changes in downstream orders.

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