China MTBE prices to stay stable on weak demand, fuel price hikes

03 August 2012 09:14  [Source: ICIS news]

SINGAPORE(ICIS)--Prices of methyl tertiary butyl ether (MTBE) in China are expected to stay firm in August, when fuel price hike expectations meet soft demand, market sources said on Friday.

Ex-terminal barge prices of MTBE in south China rose to yuan (CNY) 8,700-8,800/tonne ($1,363-1,379/tonne) on 3 August, up by CNY1,300/tonne from one month ago, according to C1 Energy, an ICIS service in China.

The price in east China and Shandong increased CNY1,200/tonne to CNY8,500-8,600/tonne on 3 August, C1 data showed.

MTBE prices in China started to rebound in the middle of July because of rising crude oil prices.

Brent crude prices rose from $93/bbl in late June to around $103/bbl in late July.

Under the existing pricing scheme, China would adjust gasoline and diesel prices when the 22-day moving average of the benchmark crude prices changes by 4% or above. The window for an upward adjustment will open on 10 August, C1 data indicated.

This boosted China’s MTBE market sentiment as 90% of MTBE goes into the gasoline blending market, industry sources said.

Growing fuel price hike expectations will continue to support MTBE market sentiment.

However, downstream buyers may be deterred by the high prices and hence are buying on a hand-to-mouth basis, traders said.

In addition, MTBE supply in China is expected to be largely stable, market sources predicted.

China’s MTBE producers are likely to run at 64.6% capacity on average in August, flat with the previous month, because of a persistent feedstock supply shortage, market players said.

Only two import cargoes with a total of 10,000 tonnes of MTBE are likely to head to east China in August, according to C1 data.

($1 = CNY6.38)



By: Hedy Dong



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