Starting in late August, the domestic methyl ethyl ketone (MEK) market experienced a surge, quickly breaking through the previous year's highest price level and continuing its upward trend. In mid-September, the East China market briefly approached the 10,000 yuan mark. By the end of the month, prices had slightly retreated from their peak, hovering around 9,500 yuan/ton. In just over a month, MEK prices rose by nearly 3,000 yuan/ton, an increase of over 40%.

This price surge was primarily driven by tight supply. From late August, news of Qixiang Tengda's Zibo plant undergoing temporary maintenance to replace catalysts benefited the market. Subsequently, with the approach of the National Day holiday, rumors of production and transportation restrictions increased, leading downstream companies to make advance purchases. The rebound in overseas markets also boosted exports, resulting in a bullish market sentiment. Most traders were reluctant to sell, anticipating further price increases, leading to a very tight spot supply and fueling speculation among industry players, driving the market's center of gravity upward. September's oil price surge further fueled the market rally. The "black swan" event of the attack on Saudi oil facilities, causing a surge in international crude oil prices, was a major boon for the domestic chemical industry, leading to a collective rise in the chemical market, including a continued upward push in methyl ethyl ketone (MEK) prices. Later, as crude oil prices corrected, market resistance to high prices diminished, and MEK prices saw a slight pullback.

This is not the first time the MEK market has experienced a sharp price increase. At the beginning of this year, MEK prices rose by over 25% in the month following the Spring Festival. This was mainly due to maintenance plans by some large manufacturers, coupled with overall low industry capacity utilization, which significantly increased bullish sentiment in the market. Looking further back, almost every major MEK price surge in history has been closely related to short-term supply shortages. According to statistics from Chemical Online, the current total domestic MEK production capacity is over 700,000 tons, with about 10 manufacturers, but most have a capacity of less than 60,000 tons. Moreover, domestic demand continues to shrink, currently below 300,000 tons, resulting in low operating rates or long-term shutdowns for some small-capacity manufacturers. Therefore, maintenance shutdowns of certain plants (especially large ones) have a significant impact on the domestic market, boosting bullish sentiment and driving prices up in the short term. However, market demand has been a key factor constraining the domestic methyl ethyl ketone (MEK) market in recent years. MEK, as a solvent, is mainly used in coatings, adhesives, and cleaning agents. According to statistics from Chemical Online, domestic demand is less than 300,000 tons, indicating a clear oversupply in the industry and a generally weak market. Exports, however, have shown some relatively bright performance. Statistics show that exports have steadily increased over the past decade, reaching 150,000 tons in 2018. The latest customs data shows that exports reached 124,000 tons in the first eight months of 2019, and are expected to exceed 180,000 tons for the whole year. However, internationally, demand for MEK in developed countries such as Europe, the US, and Japan is very stable, with almost no increase. Whether the favorable export situation can be sustained remains questionable.

In the short term, on the supply side, with the restart of previously shut-down plants, the expected increase in supply will put downward pressure on prices. On the demand side, the northern market had already felt the impact of production restrictions and shutdowns before the National Day holiday. Furthermore, with the "Blue Sky Protection Campaign" launching in the north on October 1st, most downstream factories faced production limitations. Due to the excessively high price of methyl ethyl ketone (MEK) and the fact that downstream end-user industries were struggling to maintain the same level as last year, downstream industries gradually switched to relatively cheaper substitutes such as toluene, acetone, and MIBK for production. The price increases in overseas markets were less significant than in the domestic market, and foreign buyers were also resistant to high prices, which was unfavorable for subsequent factory exports. Demand appeared weak, and the fundamentals lacked support. In terms of market sentiment, there were many profit-taking positions. Saudi oil production recovered faster than expected, and MEK distributors began to sell at higher prices. Considering the transportation restrictions in the week before the National Day holiday and the potential backlog of goods produced during the holiday, companies were actively selling at high prices, and high profits led to price reductions and promotions. Overall, with numerous negative factors accumulating, the domestic MEK market faces the risk of a high-level correction, which has already been reflected in the market conditions since late September.

In the long term, the domestic MEK market itself has shown a year-on-year shrinking demand trend, and currently, no other new downstream industries are visible. Furthermore, increasingly stringent environmental inspection mechanisms in China will severely impact traditional industries such as coatings and adhesives, casting a shadow over the future prospects of methyl ethyl ketone (MEK). From a domestic supply perspective, production capacity is relatively concentrated, making the market susceptible to market fluctuations and driving up prices. This surge in MEK prices will not be the last, but overall demand will likely keep the market sluggish.