Why did China's MEK capacity grow in 2023 while output actually declined?

Why did China's MEK capacity grow in 2023 while output actually declined?
China's MEK industry crossed 900,000 tonnes/year of total capacity in 2023, driven by Anhui Zhonghuifa's new 120,000-tonne plant coming online. Yet actual production fell that year. This paradox stems from several factors: some older units remained shut for extended periods, and poor market conditions kept operating rates low across the sector. The market structure is characterized by an aging installed base and dominant leadership by Qixiang Tengda, which discourages smaller producers from running at high utilization. Additionally, MEK is subject to precursor chemical regulations that slow capacity expansion and complicate logistics. The result was a supply-demand mismatch—capacity grew, but output contracted—leaving the market tighter than headline capacity numbers suggested and supporting prices despite apparent oversupply risks.