Market and product
Europe MEK prices increasingly polarised in two-tier market
The current ICIS price range is €2,150-2,300/tonne FD (free delivered) NWE (northwest Europe), an increase of nearly 50% compared to early October. The upward trend is the result of very low availability at two major producers, according to sources.
However, even the average price pales in comparison to some offers seen in the market.
'Prompt’ material in Europe is reliably attested to be €2,800/tonne FD NWE or higher, with several distributors asserting that they have carried out business at this level. Even higher prices also exist for small quantities, with some players putting them at €4,000/tonne, or even €6,500/tonne.
Meanwhile, material is also available from abroad at levels close to €2,000/tonne - providing buyers can hold out without supplies for a few weeks.
“The highest [price] we’ve seen in Europe is around €4,000/tonne, which is ridiculous,” one distributor said.
“We have realised sales at this level. Prices can be between €3,000-4,000/tonne depending on quantities and other factors.”
However, it also said that it has seen wide variations in costs depending on when material needs to be delivered, with prompt going for incredible levels above €3,000/tonne but December import prices being much lower.
Other distributors have noted that buyers are resisting the current European prices, but that those without firm contracts and an urgent need for material may have to pay them eventually.
For obvious reasons, many buyers which can afford to wait are delaying buying material for as long as they can in order to avoid paying the prices being quoted by European distributors and producers. Material from abroad is expected to begin arriving in the next 1-2 weeks.
Buyers say that prices for imported US material are around €2,000/tonne FD NWE, with some Asian prices as low as €1,650/tonne FD.
"My forecast in price is €1,900/tonne second half of November and €1,700-1,500/tonne in December due to plenty of volumes, a combination of different sources and also the final [part] of the year [with] the company destocking, "one buyer said.
Since the year 2000, the MEK market in Europe has tended to experience periods of stability followed by extreme short-term fluctuations, with prices often more than doubling in only a few months.
The price of €2,380-2,500/tonne FD NWE of 21 October 2014, which occurred following a reported force majeure on MEK at chemical major Shell, is the highest ever recorded by ICIS.
These fluctuations are usually the result of supply constraints; in 2004, for example, prices went from €650/tonne FD NWE on 18 June to €1,550/tonne by 29 October due to strong demand and planned and unplanned outages worldwide.
In 2010, prices increased from €740/tonne on 8 January to €1,800/tonne on 18 June a few months later as a result of production problems, which caused low availability.
Market participants note that MEK is an inherently variable product. One producer said: "MEK has always been extremely volatile, [there is] no special explanation why it peaks like this."
