04 January 2013 11:23 [Source: ICB]
Around 95% of methyl tertiary butyl ether (MTBE) produced is used as an octane booster and as an oxygenate in gasoline. One of its major advantages is its good properties for blending and for increasing the octane levels of lead-free gasoline. MTBE can be employed in the petrochemicals industry to manufacture pure isobutene from C4 butane streams by reversing its formation reaction. It is a good solvent, used as a laboratory reagent to extract semi-volatile organic compounds from such sample types as leachates or solid wastes, and as a pharmaceutical agent to dissolve gallstones. Other outlets include the production of methacrolein and methyl methacrylate.
MTBE supply in Europe was tight for most of 2012. Much of this can be attributed to an ongoing disinclination to build inventories, which in turn was the result of steep backwardation on gasoline prices. Because MTBE prices are linked to gasoline prices, this backwardation was also seen in the MTBE market. This pricing structure incentivised producers and distributors to sell products on as forward dates as possible, thereby achieving higher prices, but preventing inventories from building.
Domestic production was also inhibited during the fourth quarter of 2012 by low run rates at many European crackers, which provide feedstock raffinate for MTBE production. European crackers were operating at an average rate of 75% because of poor profit margins.
Furthermore, tightness in the US Gulf market, which predominantly supplies South America following the 2005 US ban on MTBE, resulted in a flow of European product - or indeed Middle Eastern product via Europe - westwards, putting further strain on European supplies.
There are no new European MTBE plant projects on the horizon. However, some plants, including Europe's largest - LyondellBasell's unit in Botlek, in the Netherlands, have the capacity to produce either MTBE or ETBE, a similar chemical using bio-ethanol as a feedstock instead of methanol. This swing-capability can alter the effective size of European production capacity, and those producers that are able will switch between the two products depending on profitability. Lately, ethanol has been priced far higher that methanol and the usual bio-premium afforded to ETBE by EU mandated renewable fuel targets has been eroded by poor demand. As such, production has swung in favour of MTBE and this is likely to have countered the factors above to some extent.
As usual, the bulk of the MTBE price trend over the past year has been dictated by the price of gasoline, which in turn is heavily influenced by the price of crude oil.
The MTBE factor against gasoline, a measure of the MTBE price relative to that of gasoline, and therefore an indication of the independent value of MTBE, has fluctuated throughout the past year. Curiously, the periods of strength did not necessarily coincide with the traditional seasonal high and low seasons for MTBE demand. For example, the start of the year - in the middle of the winter low-season - saw the highest factor value. The factors behind the factor peaks tended to repeat themselves: a tightening of the US Gulf market would draw product from Europe, which was already tight through backwardated gasoline and restricted cracker rates.
The effect on absolute prices of fluctuations in both the MTBE factor and in energy prices was a spread of over $500/tonne between the highest and lowest MTBE prices seen in 2012.
The reaction of isobutene with methanol over a catalyst bed produces MTBE. The reaction can take place in either a liquid-phase reactor or a mixed gas-liquid-phase reactor that contains an acidic ion exchange resin. Alternatively, sulfuric acid can be used as a catalyst.
MTBE is produced by reacting isobutene with methanol over a catalyst bed in either a liquid phase or mixed gas-liquid phase reactor. The reaction mixture is distilled to produce high purity MTBE. MTBE is also obtained as a byproduct from the propylene oxide (PO) process where tert-butyl alcohol is dehydrated to isobutene. Because of its ban in the US, processes have been developed to convert MTBE units to produce high-octane alkylate products.
There is little expected change in the European supply picture, with no projects in the pipeline.
Europe will continue to import from the Middle East, often for blending and re-export as finished gasoline, but will face increasing competition for supplies from Asia Pacific, which is seeing strong demand growth.
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