Market Intelligence Report on Methyl Ethyl Ketone (MEK) – Recent Commodity Market Dynamics

I. Price Trends
1. Recent Price Movements
- On May 22, 2026, the national average market price of MEK stood at RMB 11,866.67 per metric ton, representing a 2.47% decline from the early-May level of RMB 12,166.67/ton.
- From May 14 to May 22, prices experienced a sustained downward drift, with a cumulative decline of RMB 300/ton—equating to an average daily decline of approximately RMB 37.5/ton.
- On May 25, the Business Society’s benchmark price remained unchanged at RMB 11,866.67/ton, signaling short-term price stabilization.

2. Historical Price Comparison
- The average price in Q1 2026 was RMB 7,712/ton; March 2026 recorded the quarterly high at RMB 13,750/ton.
- Current prices remain within the mid-to-upper range of the 2025–2026 cycle but are 13.7% lower than the March 2026 peak.

II. Supply and Demand Dynamics
1. Supply Side
- Domestic Capacity: As of 2025, China’s total MEK production capacity reached 1.097 million tons/year, comprising 847,000 tons/year from the n-butene hydration process and 250,000 tons/year from the sec-butyl acetate process.
- Plant Operations: Domestic facilities operated stably in Q1 2026; however, overseas supply contracted due to reduced operating loads at plants in Japan and Taiwan, resulting in a >70% year-on-year increase in China’s MEK exports during Q1.
- Potential Risk: Approximately 350,000 tons/year of new domestic capacity is scheduled for commissioning in 2026; if launched as planned, it will further intensify supply pressure.

2. Demand Side
- Domestic Demand: Key downstream applications include adhesives (>30%), PU slurry, and coatings (combined share ~67%).
- The coatings sector faces weak demand amid the ongoing property market downturn; conversely, adhesive demand remains steadily supported by the “14th Five-Year Plan” industrial policy objectives.
- Export Demand: In 2022, export volume reached 255,000 tons (+79.07% YoY), but exports declined in 2025 versus 2024, weakening the export diversion effect on the domestic market.
- Short-Term Dynamics: In late May, downstream buyers adopted a just-in-time procurement strategy; high price levels suppressed restocking enthusiasm, resulting in limited demand-side support.

III. Cost Structure and Profitability
1. Raw Material Prices
- Diisobutylene (DIB)-grade C4 (a primary MEK feedstock) prices are highly sensitive to international crude oil fluctuations. In March 2026, Middle East geopolitical tensions drove crude oil prices higher, pushing DIB-grade C4 prices up by over 80%, providing strong cost support for MEK.
- Since May, raw material prices have retreated alongside falling oil prices; nevertheless, the MEK–C4 processing margin remains elevated, sustaining healthy production profitability.

2. Industry Profitability
- In 2025, the average profit for MEK producers stood at RMB 717/ton, down 13% YoY from 2024.
- Producers using the n-butene hydration route reported profits hovering around RMB 500/ton; some experienced losses during mid-year periods, with peak losses reaching RMB 200/ton.
- Despite current high processing margins, robust profitability may incentivize existing producers to operate at full capacity—thereby constraining upside potential for price recovery.

IV. Market Sentiment and Macroeconomic Factors
1. Market Sentiment
- Following the sharp price surge in Q1, market sentiment has turned cautious. Trading activity weakened in late May, with traders adopting a wait-and-see stance.
- Export pricing has entered an upward bottleneck phase; overseas buyers’ willingness to accept higher MEK prices is waning, diminishing foreign trade support.

2. Macroeconomic Factors
- Growing expectations of easing Middle East geopolitical tensions—and potential resumption of operations at Japanese and Taiwanese plants—could narrow the global supply deficit, exerting downward pressure on prices.
- Domestic macroeconomic sentiment remains subdued; sluggish recovery in downstream sectors—including real estate and electronics—limits the emergence of explosive demand growth.

V. Analysis and Outlook
1. Short Term (1–2 Weeks)
- Price Trend: Prices are expected to consolidate within the RMB 11,800–12,000/ton range—stabilized near current levels but lacking clear upward momentum.
- Key Drivers: A tug-of-war between export support and domestic demand weakness; diminishing cost-driven influence; market awaiting new catalysts.

2. Medium Term (1–3 Months)
- Price Trend: Should overseas supply recover or new domestic capacity come online, prices may decline to RMB 11,000–11,500/ton.
- Key Risks: Recurrence of Middle East conflict, significant crude oil price volatility, or unexpectedly strong downstream industry recovery.

3. Long Term (6–12 Months)
- Price Benchmark: The 2026 annual average price is likely to fall below the 2025 level (RMB 8,182.61/ton), carrying risk of hitting a multi-year low.
- Core Rationale: Persistent imbalance between ample supply and insufficient demand remains unresolved; industry-wide average profitability is unlikely to meaningfully rebound, keeping prices structurally under pressure.