Chemical Profile: Europe MIBK

USES

Methyl isobutyl ketone (MIBK) is mainly used in solvent applications, primarily for surface coatings. It is also widely used as an anti-ozonant in tyres, helping prevent or slow down degradation due to ozone exposure.

It is also used in rare-metal extraction, as a process solvent for pharmaceuticals and adhesives, and as a chemical intermediate. MIBK’s dewaxing and separating properties can be used to purify pharmaceuticals, mineral oils, tall oil, stearic acid and butanol.

MIBK is very useful in developing high-solid coatings. It is also used in the manufacture of germicides, fungicides, pharmaceuticals, electroplating solutions, and as a denaturant in many ethanol formulations.

SUPPLY AND DEMAND

MIBK availability was low at the beginning of 2015 due to a force majeure at Shell’s Pernis plant in the Netherlands, according to market sources.

However, the situation returned to normal in the first quarter of the year due to the resumption of production at the Pernis plant and supply from imports also increasing, and as a result prices trended downwards from January to March.

Availability remained adequate for the market from Q2 to Q4, with most price changes caused by fluctuations in demand and feedstock price levels.

Spot demand for MIBK was mostly stable at a low level in Europe for 2015, as a result of the majority of sales being carried out on the monthly and quarterly contract markers.

Typical fluctuations in demand occurred throughout the year, with the summer holidays slow because of many players being away from the market. Destocking has also begun in Europe as of Q4 in preparation for the end of the year, which has begun to reduce demand amongst consumers.

As a result of low prices in Q4, driven by feedstock developments and the resulting reduced netbacks, one European producer lowered run rates at its MIBK plant. However, product has been adequately supplied from elsewhere and therefore there has been no real tightness in the market.

PRICES

MIBK spot prices began 2015 at high levels as a result of the aforementioned limited availability from Shell’s plant.

Spot numbers fell from this peak from January to March as availability improved and the market began to come back into balance, with prices levelling off towards the middle of the year.

In the last quarter of 2015 prices began to trend strongly downwards again due to pressure on the feedstock acetone market, which belatedly began to react to upstream changes, having previously been kept artificially high by a spate of cracker problems in Europe.

TECHNOLOGY

There are two main routes to produce MIBK. One is a three-step process via acetone condensation, which gives diacetone alcohol that readily dehydrates to give mesityl oxide, which is then hydrogenated to MIBK.

MIBK is also produced from isopropanol (IPA) in a mixed ketones process with di-isobutyl ketone (DIBK) and acetone as coproducts. Methyl isobutyl carbinol, DIBK and mesityl oxide are coproduced or recovered during the process.

OUTLOOK

European MIBK price developments will be strongly tied to feedstock movements in Q4 2015, with a soft acetone market adding to the uncertainty felt in regards to the product. Spot demand is also expected to be relatively weak. Some early destocking is also expected, with players already looking at reducing their stores for the end of the year.

In the longer term, demand on the spot market is quite stable at a low level as a result of the majority of volumes being bought and sold on a contract basis. Prices will continue to track feedstock trends, which are fundamentally tied to expected weak demand and oversupply for crude oil in the medium- to long-term future.

As a result, feedstock trends are also expected to be stable to soft in the medium- to long-term future. In the meantime there are no anticipated capacity changes in the European market at present, and availability is structurally good. As a result, the overall outlook for MIBK is also stable to soft.