04 January 2013 16:13 [Source: ICIS news]
LONDON (ICIS)--High prices in the European methyl tertiary butyl ether (MTBE) market have made the gasoline component uneconomical for domestic blenders, a producer said on Friday.
The high prices have been caused by demand from Venezuela, which has been forced to source from Europe because of tightness in the US Gulf. MTBE is banned in the US and so US production almost exclusively supplies the South American market.
The European market was already snug when this additional export demand emerged around mid-December, and prices have increased by over $280/tonne (€216/tonne) since then.
Because MTBE is a blending component in gasoline, its value is often assessed in terms of its price relative to that of gasoline, known as the MTBE factor against gasoline.
The MTBE factor increased to 1.40 this week, up from 1.20 in mid-December.
“Domestic demand has been killed by this factor,” said the producer, who estimated that absolute prices would need to fall by over $200/tonne to make MTBE a viable component again for European blenders.
($1 = €0.77)
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