Europe spot ETBE offered at record low premiums over MTBE

03 March 2011 18:48  [Source: ICIS news]

LONDON (ICIS)--Ethyl tertiary butyl ether (ETBE) has been offered at record low premiums over methyl tertiary butyl ether (MTBE) in the European spot market amid extremely low demand and an oversupply of ETBE, a producer said on Thursday.

The producer was offering material at $30/tonne (€22/tonne) FOB (free on board) AR (Amsterdam, Rotterdam) over MTBE, but had no takers.

During the week ending on 4 February, ETBE premiums fell to record lows of $110/tonne and have remained in negative territory since. Previous to this, the record low was $111/tonne in the week ending on 12 November 2010. ICIS records began at the start of 2007.

ETBE demand, already down in the winter off-season, has been further dampened by the high price of MTBE in recent weeks. Because ETBE is traded on a premium basis over MTBE, the price of the former is dictated to a large extent by that of the latter.

MTBE prices have risen to 31-month highs this week of $1,090-1,150/tonne FOB AR, primarily as a knock-on effect of the high crude oil prices caused by the political unrest in northern Africa and the Middle East.

ETBE demand has been eroded further by the introduction of E10 gasoline (10% ethanol) in the key German market. With ethanol being cheaper than ETBE, the former is beginning to replace the latter as the bio-component of choice.

“The price of MTBE is putting off ETBE buyers… there’s less need as well because of E10,” the producer said.

An oversupply was developing as a result of the diminished offtake, the producer added.

Despite the low premiums, ETBE absolute prices were increasing because of the strong gains made in the MTBE market.

With an average MTBE trade price of $1,118/tonne FOB AR, this put the flat price for the ETBE offer above at $1,148/tonne, compared with the bid/offer range last week of $1,111-1,121/tonne.

($1 = €0.72)

For more on ETBE visit ICIS chemical intelligence

By: Ross Yeo
+44 208 652 3214

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