05 April 2013 17:11 [Source: ICIS news]
LONDON (ICIS)--Methyl tertiary butyl ether (MTBE) suppliers remain confident of improved demand in Europe in spite of an ongoing poor demand for gasoline, sources said on Friday.
Demand for MTBE remains at low levels having failed to pick up as a result of the cold weather in Europe. This has resulted in prices edging down again this week.
MTBE traded at $1,236/tonne FOB (free on board) AR (Amsterdam-Rotterdam) on 18 March with continued poor demand leading to prices tumbling and trades at the end of this week taking place at $1,110/tonne FOB AR.
This downward pressure is being exacerbated by gasoline stock levels in Europe, which remain at high levels.
“Although the blending economics currently work favourably, there is currently too much gasoline in storage in the ARA (Amsterdam-Rotterdam-Antwerp) region, resulting in poor MTBE demand,” one blender said.
Suppliers however are optimistic for improved demand in Europe, owing to an open gasoline arbitrage to the US.
Although US refineries have ramped up operating levels, it is thought the arbitrage to move gasoline from Europe is still open.
One producer said this would “allow winter grade gasoline to be moved out of the ARA region and create more room for people to buy into tank.”
Another producer added that exports of gasoline to western Africa were also at “healthy levels,” which would help draw down stocks further.
With many European refineries experiencing turnarounds throughout April, suppliers remain confident that stock levels will soon decline, therefore encouraging increased gasoline consumption, and with it an improved demand for MTBE.
($1 = €0.77)
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