FocusAsia MTBE may gain on higher demand, plant turnarounds

08 February 2011 06:33  [Source: ICIS news]

By Felicia Loo

SINGAPORE (ICIS)--Asia methyl tertiary butyl ether (MTBE) prices are likely to rise after the Lunar New Year holidays, on expectations of higher regional demand and lower supply because of plant turnarounds, traders said on Tuesday.

Spot values of the octane booster in gasoline were steady at $940-950/tonne (€696-703/tonne) FOB (free on board) Singapore, supported by healthy demand within Asia despite the absence of the key Chinese market.

China is on a week-long holiday for Lunar New Year between 2-8 February.

Import requirements from China were expected to surge after the holidays, as driving demand in the world’s top energy user as well as the number-one global auto market would peak in the next few months, traders said.

Car sales in China rose an annualised 33.2% in 2010 to 13.8m units, according to a Reuters report quoting China Association of Automobile Manufacturers (CAAM).

Meanwhile, Indonesia would use even more gasoline after southeast Asia’s biggest economy posted a 6.1% growth for last year, with its fourth-quarter GDP up at 6.9% - the strongest ever in six years.

Spot MTBE premiums in Singapore have been hovering near $30/tonne to market quotes on a delivered basis for the past couple of weeks, they said.

“Premiums are at the high $20/tonne [levels]. Blending margins are quite good,” said a trader.

Blending margins, or the spread between naphtha and gasoline, had increased to $10.70/bbl on Monday’s market close from $9.30/bbl in late January, traders said.

Import needs from South Korea were particularly strong, with recent spot deals carried out at a premium of around $12-13/tonne to Singapore quotes FOB for loading in late January, traders said.

In Singapore, some fresh transactions were heard done at premiums of up to $20/tonne FOB, they said.

“South Korea is short on MTBE, so the market players are importing a lot more,” said one trader.

The cracker turnaround will be heavier this year in South Korea, sapping feedstock supply of iso-butylene, which together with methanol makes MTBE.

LG Chem is scheduled to shut its 760,000 tonne/year naphtha cracker in Daesan for a month-long turnaround and expansion works, starting on 15 March.

The plant’s ethylene capacity will be increased to around 900,000 tonnes/year after the debottlenecking work.

In addition, MTBE supply was generally tight, especially as petrochemical giant Saudi Basic Industries Corp (SABIC) was scheduled to take its 700,000 tonne/year MTBE plant off line from February to March.

The plant is located at Al-Jubail in Saudi Arabia.

SABIC, which is the world’s largest producer of MTBE, shut its 1m tonne/year and 300,000 tonne/year MTBE units for regular maintenance from late December 2010 to early February 2011. It was not immediately known if the two units had restarted yet.

In Malaysia, Petronas’s 300,000 tonne/year MTBE plant in Kuantan, will be shut on 18 April for a month-long turnaround. The plant is currently operating at full capacity.

($1 = €0.74)

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By: Felicia Loo

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