Price and market trends: Asia MTBE prices hit 28-month low

15 November 2013 09:54  [Source: ICB]

Asia MTBE prices hit 28-month low

Spot methyl tertiary-butyl ether (MTBE) prices in Asia plunged to a 28-month low the week ended 8 November, tracking the slump in Brent crude and gasoline numbers, market players said.

For the most part of the week, MTBE prices were at close to $1,100/tonne (€814/tonne) FOB (free on board) Singapore, with the 92 RON gasoline, which fell by more than $3/bbl from the previous week, continuing on a downtrend since mid-October.

Crude futures were generally trading lower despite a late-week recovery because of a build-up in crude oil inventories, especially in the Gulf Coast refining region, coupled with a stronger US dollar.

With the motor gasoline (mogas) crack at below $3/tonne since mid-August, there is not much interest to pursue extra gasoline blending activity, subduing demand for MTBE, market sources said. MTBE is used to boost the octane level in ­gasoline.

Asia’s overall gasoline demand is also poor as reflected in the naphtha-mogas spread, which fell below $10/bbl since early October, they said.

In China, however, buying interest for MTBE for blending remained strong in spite of weakening gasoline numbers.

“The window is still open for China to import MTBE,” a China-based trader said, adding that there is still some sporadic blending demand in the country.

Buying ideas were at $1,070-1,080/tonne CFR (cost and freight) China for December and even January arrivals, market players said, adding that such levels are more than sufficient to cover the freight rates for Singapore exports.

The arbitrage window from Singapore to China has remained open over the past two weeks, benefitting the Singapore-based sellers that are keen on liquidating their mounting inventory, market players said.

About 20,000 tonnes of spot cargoes are expected to arrive in China in December, they said.

“But winter is kicking in soon. So, we are not certain how long this opportunistic demand will last,” a second China-based trader said. ■

By: Ong Sheau Ling
+65 6780 4359

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