Chemical profile: MTBE

29 June 2009 00:00 [Source: ICB]

USES
Methyl tertiary butyl ether (MTBE) is used almost exclusively as a fuel component in motor gasoline. It is one of a group of chemicals commonly known as oxygenates, which are used to raise the oxygen contentof gasoline.

MTBE can also be used to make pure isobutene from C4 streams. It is a good solvent and extractant. Other uses are in methacrolein and methyl methacrylate (MMA).

SUPPLY/DEMAND
In the US, due to the widespread release of MTBE from underground storage tanks, various states have banned its use. As a result, US production has declined and most gasoline retailers have stopped using MTBE.

Similarly, demand has declined in Western Europe, but production has fallen more. This is due to the EU renewable fuels directive that promotes the use of biofuels through tax incentives, and some MTBE producers converted plants to ethyl tertiary butyl ether (ETBE). But, tight supply has driven up ETBE prices rendering it less attractive against MTBE, and some plants have switched back.

The European market is quite tight with strong demand for export, notably from the Arab Gulf, and South America.

The fall in European consumption is being offset by strong demand in new markets, such as Africa and the Middle East. US exports are now being directed to South and Central America, rather than Europe, where plants have also been converted to ETBE production for export.

PRICING
European prices rose sharply in quarter two, partly due to the rise in gasoline prices, but factors have also risen this year as supply has tightened. Spot numbers in mid-June were in the $874-930/tonne FOB AR range. Tight supply pushed up the factor to 1.30-1.34 in early June, but it had dropped to 1.23-1.29 mid-month as gasoline prices dipped.

TECHNOLOGY
MTBE is produced by reacting isobutene with methanol over a catalyst bed in either a liquid phase or mixed gas-liquid phase reactor. The reaction mixture is distilled to produce high purity MTBE.

MTBE is also obtained as a byproduct from the propylene oxide (PO) process where tert-butyl alcohol is dehydrated to isobutene.

With MTBE's use in gasoline in decline, processes have been developed to convert MTBE units to produce high-octane alkylate products.

OUTLOOK
Demand for MTBE is set to continue its decline in Europe, but it will be offset by rising consumption in other world regions, such as Asia and the Middle East - where growth will be strongest - and Africa.

Also, players say the financial crisis has slowed down the uptake of more expensive ETBE. Governments are also revising subsidies for biofuels production, which could slow MTBE's fall.

New capacity is being added in Asia, which is undersupplied, with five projects planned in China between 2009-2011. New plants are also being considered in Saudi Arabia, Siberia and India.

EUROPEAN MTBE CAPACITY '000 TONNES/YEAR

Source: ICIS plants & projects
Company	Location	Capacity
Agip	Gela, ItalySannazarro, Italy	4540
Arpechim	Pitesti, Romania	40
Carom	Onesti, Romania	100
Ceska Rafinerska	Kralupy, Czech Republic	90
EM,Refin/Marketing	Priolo, Italy	40
Esso Petroleum	Fawley, UK	125
Evonik Oxeno	Antwerp, Belgium Marl, Germany	280 270
Fortum Oil and Gas	Porvoo, Finland	115
FSK Elemir	Zrenjanin, Serbia	35
Hellenic Petroleum	Athens, Greece	70
HIP Petrohemija	Pancevo, Serbia	35
Hungarian Oil and Gas	Szazhalombatta, Hungary	55
Lindsey Oil	Grimsby, UK	100
Lyondell	Botlek, the Netherlands* Fos, France*	590 610
Mazeikiu Nafta	Mazheikiai, Lithuania	80
Motor Oil	Aghii Theodori, Greece	45
Naftan	Novopolotsk, Belarus	40
NetherlandsRefining	Rotterdam,the Netherlands	100
OMV	Schwechat, Austria	70
Petrotel Lukoil	Ploiesti, Romania	45
Raffineria di Milazzo	Milazzo, Italy	65
Rompetrol	Navodari, Romania	35
Shell & DEA Oil	Wesseling, Germany	65
Shell	Pernis, Netherlands	160
Tiszai Vegyi Kombinat	Tiszaujvaros,Hungary	30
Tobolsk Neftekhim	Tobolsk, Russia	70
Ukrtatnafta	Kremenchug, Ukraine	25
* total ether production

Profile last published November 27, 2006

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