China MTBE prices hit six-month low on soft crude, weak demand

22 April 2013 07:51  [Source: ICIS news]

SINGAPORE (ICIS)--The prices of methyl tertiary butyl ether (MTBE) in China have fallen to a six-month low as a result of weak downstream demand and softening crude futures, market sources said on Monday.

Ex-terminal barge prices of MTBE in south and east China declined to yuan (CNY) 8,550-8,650/tonne ($1,381-1,400/tonne) on 22 April, the lowest level recorded in almost six months, according to C1 Energy, an ICIS service in China.

MTBE prices have been on a downtrend since late February, tracking the decline in the international crude market, the data showed.

Gasoline blenders and traders were said to have weak interest in restocking cargoes and were keeping low inventories, as they expect the declining international crude prices to weigh on domestic gasoline prices.

This would in turn exert downward pressure on the prices of MTBE, which is mostly used for gasoline blending, according to market sources.

In addition, China’s new fuel-pricing scheme is restricting speculative trading, market sources said.

China on 27 March adopted a new pricing scheme for domestic fuel, which shortens the price-adjustment cycle from 22 consecutive working days to 10, according to the country’s National Development & Reform Commission (NDRC).

The new pricing has increased the risks of speculative trading, resulting in many traders preferring a hand-to-mouth buying approach, a market source said.

Some refinery sources said there is a slight possibility for MTBE prices to drop further and that would lead to producers facing losses. If that happens, they may lower their production or keep their MTBE output for captive use, the sources added.

($1 = CNY6.18)

By: Song Jing
+65 6780 4359

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