Methyl Isobutyl Ketone

Global Market Outlook on Methyl Isobutyl Ketone

• Anticipated increase in demand from the paints and coatings segment, alongside CPG and automobile industries during 2022–2025, 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

• South Africa, China, Japan, and South Korea will continue to be the key producer of MIBK, as there are no major capacity additions planned until 2025

Methyl Isobutyl Ketone Demand Market Outlook

• The global MIBK market has abundant supply; however, regionally, North America, Europe, and APAC are dependent on imports, predominantly from 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

• Global MIBK prices increased steadily by around 10–15 percent Y-o-Y in 2020, owing to tight supply conditions of feedstock acetone. Also, acetone prices rose by around 45–50 percent Y-o-Y, owing to a rapid increase in demand from isopropanol for producing hand sanitizers

• The MIBK market value is projected to increase by around 3.0–3.5 percent Y-o-Y during 2021–2025, owing to the expected improvement in demand from paints & coatings and solvent extraction applications in the APAC region

Global Capacity–Demand Analysis

• Capacity additions are more focussed towards China, as two suppliers in China have decided to bring in a capacity of 15 thousand MT each between 2021 and 2022, based on the demand levels

• Capacity–demand gap of MIBK in 2019 was around 117 thousand MT. The current installed capacity is good enough to meet the global demand until 2025

Market Outlook 

• Capacity: MIBK market is currently oversupplied and the future capacity additions planned by the suppliers would further add pressure to the small volume producers and also reduce the supply risk

• Operating rates and multiple short-term shutdowns: Suppliers in Asia have been announcing temporary plant shutdowns or reduce their operating rates post COVID-19 to manage their inventories and to manage the supply–demand levels to keep the price momentum and improve their profit margins

• Demand: The global demand for MIBK is projected to increase by around 3 percent Y-o-Y until 2025, mainly driven by the expected improvement in demand from the paints & coatings segment in developing countries

Engagement Outlook 

• Large volume buyers prefers dual sourcing options, with supplier presence in Asia to secure their supply and to mitigate price risk

• Though North America and Europe has deficit supply, few suppliers have an advantage, as they are backward integrated. Hence buyers in these regions can have multiple options of regional supplier and global suppliers having their presence in Asia

• Small and medium-scale buyers from CPG industry could reduce their spend only by having medium-long term contracts, which would return additional discounts, as compared to short term contract or switching suppliers

Global Demand by Application : Methyl Isobutyl Ketone

• MIBK demand from automobile and construction industries witnessed a steady fall during Q2 2021, owing to COVID-19 pandemic. However, the demand from construction sector improved towards during the second-half of Q3 2021, owing to seasonal demand

• Demand growth of MIBK from solvent extraction and surfactant industry is expected to outpace paints and coatings and rubber industry by 2023–2024

Downstream Demand Outlook

• The key applications of MIBK include paints and coatings and rubber antioxidant, including solvent extraction. The top three applications together accounts for about 90 percent of the the overall consumption of MIBK

• The US 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. Hence the demand for rubber antioxidants is anticipated to witness a good improvement as compared to US and Europe

• The global demand for solvent extraction and surfactants is expected to increase at the rate of 3–4 percent annually through 2022–2024, owing to the demand for cost-effective solvents, particularly in Asia

• Post COVID-19, MIBk demand from construction and automobile industries witnessed a good improvement in demand during Q1–Q2 2021. MIBK demand during 2022–2025 is anticipated to be mainly driven by the expected improvement in demand from paints & coatings and solvent extraction industry

Industry Drivers and Constraints : Methyl Isobutyl Ketone

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 MIBK 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

• Weak phenol demand resulted in lower acetone production, which resulted in supply shortage of feedstock acetone for MIBK producers