Introduction
In the first quarter of 2026, after a period of stalemate, the MEK (methyl ethyl ketone) market experienced a stepwise price increase driven by rising costs and export support. The spot price in the East China market rose from 6,250 RMB/ton at the beginning of the year to 13,750 RMB/ton by the end of March, a surge of 120%. Despite the sharp price rally, domestic demand remained subdued, leading to a divergence between prices and actual transactions. This resulted in a situation where quoted prices were high but market activity was thin, with trading liquidity significantly reduced.

I. Stepwise Price Increase in the MEK Market During Q1

Phase 1: Stalemate and Consolidation (January to Early February)
In January, due to generally muted trading activity, most producers focused on fulfilling previous orders, and market transaction volumes did not see a significant increase. The market operated in a stalemate. By the end of the month, units in South China entered maintenance, reducing spot supply. However, as the Spring Festival holiday approached, downstream end-user plants gradually shut down and exited the market, leading to a near-complete halt in trading. Overall market fluctuations were limited.

Phase 2: Price Recovery (Late February to Early March)
After the Spring Festival holiday, supply-side pressure was not significant. Producers actively raised their offers, driving a slight increase in market prices. However, as downstream plants had not fully resumed operations, demand recovery fell short of expectations, and trading sentiment remained weak. On February 28th, escalating geopolitical risks in the Middle East triggered a sharp spike in international crude oil prices. The rise in crude oil prices quickly transmitted to the downstream petrochemical chain, pushing up the cost of C4 feedstock. For MEK producers, the sharp increase in raw material costs squeezed profit margins, forcing most plants to raise offers to mitigate risks. Consequently, the MEK market was pushed upward passively, with East China negotiations reaching around 9,500 RMB/ton. Subsequently, crude oil prices retreated from their highs, and ether prices declined significantly. Coupled with sluggish demand and poor transaction flow, some high-end offers also adjusted downward, and the market returned to a stalemate.

Phase 3: Accelerated Rally (Mid to Late March)
By mid-March, the primary driver of the MEK market had shifted from cost-push to export-driven factors. As geopolitical tensions in the Middle East persisted, Japan and the Taiwan region of China maintained low operating rates due to tight feedstock supply. This further highlighted the export competitiveness of Chinese MEK. Major producers secured export orders smoothly, which not only directly diverted domestic supply but also fundamentally altered the market's supply-demand structure. With no pressure on production and sales, domestic producers significantly raised their offers, with single-day increases reaching 3,000 RMB/ton, hitting a nearly three-year high. Holders generally became reluctant to sell, leading to scarce offers in the market, with most actual transactions pending downstream bids and negotiations. However, domestic downstream industries such as coatings and adhesives had limited acceptance for high-priced raw materials, with procurement mainly driven by rigid demand. Market trading sentiment turned quiet, with few large-volume transactions at high prices. The overall market exhibited a divergent pattern of weak domestic demand and strong exports.

II. Analysis of Market Operating Patterns

1. Sharp Price Volatility, Reaching New Highs: The MEK price fluctuated within a range of several thousand RMB during Q1. Particularly in March, prices rose almost vertically, reaching the highest levels in recent years.
2. Drivers Primarily Influenced by Unexpected Events: The core driver of the MEK market was not steady growth in domestic supply and demand but was dominated by sudden geopolitical events. These events significantly impacted the domestic market through cost transmission and export demand.
3. Severe Divergence Between "Price and Demand": The price increase was primarily driven by producer expectations and decisions, while downstream end-user demand consistently lagged. High prices severely suppressed actual consumption, leading to a significant mismatch between market trading activity and price gains, highlighting structural contradictions.
4. Market Sentiment Shifted from Game-playing to Excitement, Then to Caution: At the beginning of Q1, buyers and sellers were in a stalemate, with limited price volatility. During the cost-driven rise, seller sentiment dominated. Coupled with export support, the market entered a strong upward phase. By the end of the quarter, with prices at highs, downstream procurement turned cautious, and market sentiment shifted to a state of cautious watchfulness and confrontation at high levels.

III. Q2 MEK Market Supply Expected to Stabilize, Prices May Return to Rationality

The current MEK market exhibits a pattern of "strong externally, weak internally." The high price level is entirely driven by export orders, while the domestic market, under cost pressure, has fallen into a negative cycle of "demand contraction → reduced operating rates." As external demand support loosens, pressure on market transactions will gradually accumulate, posing significant downside risks. Once the pace of export order procurement slows, or international plants resume production, support for the market will be directly weakened. For the domestic market, downstream end-user plants face high cost pressures, leading to passive declines in operating rates. The situation of high quoted prices but thin trading in the domestic market is likely to persist, with no significant turnaround in sight. Currently, the sales pressure on producers is shifting from exports to the domestic market. It is anticipated that the MEK market will face substantial downward pressure in Q2, with the price range gradually correcting to stimulate procurement in the domestic market. However, due to the relatively low average price base in Q1 and the time needed for the correction process, the overall average price in Q2 will still be significantly higher than the Q1 level. It is recommended that industry participants closely monitor export orders and the status of international plants, and maintain a cautious approach in operations.