Europe MTBE prices retreat after Venezuela demand is satisfied

11 January 2013 15:39  [Source: ICIS news]

LONDON (ICIS)--European methyl tertiary butyl ether (MTBE) prices have fallen by $238/tonne (€179/tonne) since the close of last week because export demand from Venezuela has been satisfied, sources said on Friday.

The decrease takes prices to similar levels seen in mid-December, which is when buy-tenders from Venezuela emerged.

The additional demand resulted in huge price increases, but now the tenders have been fulfilled this additional demand is no longer present, and the market has returned to "normal", sources said.

MTBE prices relative to EuroBob gasoline, known as the factor value, have fallen from a peak of 1.44 last Friday to 1.24-1.25.

Although further decreases are possible, sources feel the market has essentially bottomed out and there is limited space for more downward movement.

One reason for this is the spread between gasoline and naphtha prices, which at close of business of Thursday was $65/tonne. This is a sufficiently wide spread to encourage blending naphtha into gasoline, and sources feel this will provide support to other gasoline components, such as MTBE.

“What’s interesting is that although the Venezuelan demand is over, for the time being, we’ve got a better gasoline-naphtha spread, and this should support the new [MTBE price] level,” said a producer.

Furthermore, the producer pointed to the delayed implementation of an import tax in China on a range of gasoline related products, including MTBE, reformate and aromatics.

This tax, which the producer said could increase prices by upwards of $200/tonne, was originally due to be implemented at the start of 2013 but has been postponed, with no known reschedule date.

The producer believes the result of this will be the return of Chinese demand for imports of the relevant products, and that this will lend further support to MTBE prices.

($1 = €0.75)

By: Ross Yeo
+44 208 652 3214

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