14 April 2011 07:28 [Source: ICIS news]
By Ross Yeo and Felicia Loo
LONDON/SINGAPORE (ICIS)--European spot prices of methyl tertiary butyl ether (MTBE) surged to a record high this week, on the back of robust global oil futures, tight supply and firm demand, triggering a price rally in ?xml:namespace>
Domestic prices in
In Europe, MTBE prices soared to $1,438-1,460/tonne (€992-1.007/tonne) FOB (free on board)
Prices of the octane booster was assessed significantly stronger as $1,190-1,210/tonne FOB Singapore in the week ended 8 April, the highest levels since 11 July 2008, when MTBE prices closed at $1,210-1215/tonne FOB Singapore, the data showed.
Global Brent crude futures are hovering near $123/bbl on Thursday amid a civil war in OPEC member
Even the leading
“Supplies are drained in
MTBE CFR (cost & freight) China prices at $1,170-1,250/tonne, already lifted following
“There are hardly any [spot] imports and it’s a difficult situation,” another trader said.
At this juncture, MTBE plant maintenance was scarce in
On April 7,
The 22-day moving average price of a basket of international crude oil – Brent,
The National Development and Reform Commission (NDRC) usually delays the adjustment for 20 days and is more likely to do so now as it tries to stabilise prices against inflation in China this year, industry sources said.
Signs of slowing car growth rate to single-digit levels could temper demand, but the impact might not be apparent until a few months down the road, market players said.
The exit of stimulation policies, rising fuel prices, restrictions on car buying in first-tier cities such as Beijing and Shanghai, stricter emission rules and the 11 March earthquake and tsunami in northeast Japan slowed down China’s car market expansion in both March and the first quarter, the association said.
In addition to the usual seasonal increase in blending demand during summer, sources identified two unanticipated factors which were contributing to the supply imbalance.
The first was the arbitrage westwards across the Atlantic, which has resulted in high levels of exports and is supported by strong demand from Venezuela, as well as a scheduled turnaround at one of LyondellBasell’s two Channelview, Texas units, removing around 12,000 bbl/day for up to two months from April.
The second factor is the strong MTBE consumption by the German market which followed the unpopular introduction of E10 gasoline (10% ethanol) in February this year.
The market had previously expected E10, which replaced regular RON95 gasoline blends at German pumps, to destroy MTBE demand in favour of ethanol.
Yet, the poor public reception of the high-ethanol blend, largely borne out of concerns over potential vehicle damage, as well as the lower energy content of ethanol, has led to a boost in demand for the only other blend of gasoline usually available – ‘super’ RON98, which contains high levels of ether such as MTBE or ethyl tertiary butyl ether (ETBE).
“I think everyone will have taken the high summer demand into account, but it’s these other two factors which no one expected and are really tightening the market,” said a producer.
Despite the extraordinarily high prices, no significant increase in imports has yet been seen and sources said it was unclear whether or not the high European prices would attract Middle Eastern volumes.
While prompt values are high, the paper market is steeply backwardated, increasing the risk that prices will have decreased by the time shipments arrive, thus exposing importers to significant potential losses. This risk is likely to keep a limit on the volumes imported until the pricing curve levels out somewhat, sources said.
“People talk about [increased imports from the
Further increasing the risks of importing are the high crude oil prices caused by the turmoil in North Africa and the
Although European gasoline pricing has been comparatively stable in the last week or so, levels are still high and contribute significantly to the price of MTBE. Should the political situation in the region stabilise, particularly in
“Of course everything is related back to crude, so the whole geopolitical scene will affect a lot of products, MTBE included,” said a second producer.
($1 = €0.69 / $1 = CNY6.53)
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