14 September 2012 07:53 [Source: ICIS news]
By Ong Sheau Ling
SINGAPORE (ICIS)--Downside potential for Asia methyl tertiary butyl ether (MTBE) prices is likely to be limited, because of high energy prices and fewer European and Arab Gulf arbitrage cargoes, despite weaker demand, industry sources said on Friday.
Spot MTBE prices were assessed at $1,184-1,186/tonne FOB (free on board) ?xml:namespace>
Regional traders and gasoline blenders agreed that the strengthening of energy prices over the week was the key price booster.
ICE Brent was at $116.55/bbl for November on 14 September mid-day, up 67 cents from yesterday, ICIS reported.
“Fundamentally, MTBE prices track closely to crude. Based on this week’s energy price trend, it is evident that MTBE prices are on the climb,” a producer based in
A Singapore-based trader said: “[MTBE] prices are rising now, primarily driven by cost [as crude futures gain strength].”
Sentiment in the energy markets will improve following the announcement of a stimulus package by the US Federal Reserve last night, a second trader based in Singapore said.
"So, we may not see the cost [of MTBE production] to come down anytime soon,” the trader added.
The higher gasoline prices in
MTBE is used as an additive to boost octane levels in gasoline.
The Chinese government has increased gasoline prices by yuan (CNY) 550/tonne ($87/tonne). With the hike, the national average retail price of 90-RON (research octane number) gasoline has reached CNY9,640/tonne, effective from 11 September.
On 14 September mid-day, ex-terminal barge prices of MTBE in southern and eastern China rose to CNY9,350-9,450/tonne and CNY9,150-9,250/tonne respectively, up by CNY50-100/tonne from last week, according to C1 Energy, an ICIS service in
The widening in the inter-RON spread between 97-RON (research octane number) and 92-RON gasoline to $6.75/bbl on 13 September from 6 September’s level of $1.60/bbl also lifted blenders’ confidence slightly, traders said.
The US Federal Reserve announced late on 13 September a new version of quantitative easing, QE3 and extended its low-rate policy to mid-2015.
On the supply front, fewer spot arbitrage cargoes originating from Europe and
“We did not receive many spot offers for October delivery [from Europe and
In MTBE’s key downstream market – gasoline blending, demand for October procurement has slowed down as both
“Demand is waning. There are no enquires [for new MTBE cargoes] from
Many Chinese gasoline blenders have already procured sufficient MTBE material in preparation for peak travelling season in early October. The Mid-Autumn Festival and the country’s National Day fall within the month and more cars are expected to be on the road.
“In November and December, it is the traditional seasonal demand lull for MTBE. Appetite for fresh MTBE will be smaller,” another Chinese trader said.
A northeast Asian buyer said: “Looking at the expected decline in gasoline blending activity [in
Additional reporting by Hedy Dong
($1 = CNY 6.33)
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