Methyl Isobutyl Ketone

Global Market Outlook on Methyl Isobutyl Ketone

• The global market is estimated to grow at a CAGR of 2.3–2.5 percent during 2017–2024
• Anticipated increase in demand from the paints & coatings segment, alongside CPG and automobile industries during 2021– 2024, is likely to drive the demand for MIBK in the emerging markets, such as Asia, Brazil, and Eastern Europe, while demand growth in Europe and North America is expected to remain moderate

Demand Market Outlook

• The global MIBK market has abundant supply; however, regionally, North America, Europe, and APAC are dependent on imports, predominantly from Sasol, South Africa
• MIBK demand will continue to be driven by the paints and coatings segment, followed by the tire segment, driven by growing investment in economies, such as Brazil and India

Global Market Size: MIBK

• There was a steep dip in MIBK prices in 2015 as against 2014, backed by the decreasing feedstock acetone and propylene prices and the overall sluggish downstream demand markets
• Crude oil abundance and expected stability in feedstock prices at the lower limits are expected to stabilize the methyl isobutyl ketone market value
• An expected marginal increase by 1–2 percent annually through 2022 would be driven by the global demand; however, the methyl isobutyl ketone market size may not reach 2015 levels again

Global Capacity–Demand Analysis

• No expected capacity additions, due to a moderate growth of 2.5 percent across the globe for MIBK in the paints and coatings segment

• Overall, the global demand –supply scenario is expected to remain stable

Market Outlook 

• Capacity: There are no planned capacity additions announced until 2022, as moderate demand is noticed in most parts of the world
• Operating rates and multiple short-term shutdowns: Suppliers in Japan and China have been announcing temporary plant shutdowns for the past one year, due to weak margins. Operating rates range from 50 percent to 80 percent among suppliers across the producing regions
• Demand: The global MIBK demand is expected to increase at the rate of 2.5–3.0 percent through 2022, especially from the paints and coatings segment in the developing countries

Engagement Outlook 

• It is recommended to engage in multiple sourcing options, since there is a limited supply security, especially with Asian suppliers
• There is high supplier security with European and North American suppliers, since they are backward integrated with no expected plant shutdowns
• Small and medium-volume buyers in CPG are recommended to engage in long-term contracts to ensure supply security

Global Demand by Application

• Demand from automobile segment witnessed a moderate demand owing to slowdown in automobile production. However, it is expected that the demand from automobile segment and seasonal demand from construction sector and the solvent extraction would continue to drive the demand of MIBK until 2022
• Demand growth of MIBK from solvent extraction and surfactant industry is expected to outpace paints and coatings and rubber industry by 2022

Downstream Demand Outlook

• The key applications of MIBK include paints and coatings and rubber antioxidant, including solvent extraction and surfactant applications, constituting to almost 93 percent of the overall demand share
• The U.S. and Europe are becoming stringent on the usage of MIBK in rubber, due to emission standards. This is less stringent in Asia and other developing economies
• The global demand for solvent extraction and surfactants is expected to increase at the rate of 2–3 percent annually through 2022, owing to demand for cheaper solvents, particularly in Asia
• Small-volume buyers are recommended to secure their supply with long-term contracts and collaborate, based on innovation and branding, in order to compete against the large-volume buyers in the paints and coatings and rubber segments

Industry Drivers and Constraints

Drivers

• More than 60 percent of global MIBK output is produced using acetone
• Acetone controls the supply and prices of MIBK to a great extent
• Rapid urbanization, rise in middle-class population, and an increase in residential construction spending are the key factors that support the increased demand for MIBK globally
• Downstream sectors in Asia, particularly the tire industry, where MIBK is used as rubber anti-oxidant, are expected to improve, driving the demand for MIBK

Constraints

• Butyl acetate is the substitute for MIBK in the solvents industry, the feedstock for that is acetic acid, which is cheaper compared to acetone (feedstock for MIBK)
• Higher methyl isobutyl ketone prices compared to butyl acetate have encouraged the coating industries to switch to butyl acetate
• Supply of acetone is dependent on demand for co-product, phenol
• In 2012, weak phenol demand resulted in lower acetone production, which resulted in supply shortage of feedstock acetone for MIBK producers