China’s Shandong teapot refiners keep MTBE op rates at 40%

06 August 2012 10:26  [Source: ICIS news]

SINGAPORE (ICIS)--China’s Shandong-based teapot refiners are running their methyl tertiary-butyl ether (MTBE) units at around 40% of capacity mainly because of shortage of feedstock C4 gas supply, company sources said on Monday.

Tight availability of feedstock gas was primarily caused by fast expanded MTBE capacity in recent years, market players said.

Shandong teapot refiners increased their MTBE capacity to 1.94m tonnes/year in 2011 from 1.63m tonnes/year in 2010, according to C1 Energy, an ICIS service in China.

Meanwhile, major refiners also expanded their MTBE capacities as they need MTBE to produce higher quality gasoline, market sources said.

However, high feedstock prices have dampened refiner’s interest in producing MTBE, according to sources.

A source at one Shandong-based teapot refiner said that they almost have no margins for producing MTBE because of rising feedstock prices.

MTBE prices in Shandong were at around Chinese yuan (CNY) 8,600/tonne, 16% up from around CNY7,400/tonne a month ago whereas C4 prices were at around CNY6,200/tonne, about 20% up from CNY5,200/tonne last month.

Low operating rates at teapot refiners has limited the commercial supply of MTBE in the Shandong market because few local refiners have spare products after retaining a certain amount for captive use to blend it in gasoline, the sources added.

($1 = CNY6.37)

By: Song Jing
+65 6780 4359

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