OUTLOOK '18: Europe MTBE, ETBE players expect stability to continue

Source: ICIS News


LONDON (ICIS)--The European methyl tertiary butyl ether (MTBE) and ethyl tertiary butyl ether (ETBE) markets are set to be steady in 2018 although market players will closely track Eurobob gasoline fundamentals.

Both MTBE and ETBE values are inherently affected by changes in the Eurobob gasoline market, with both products being octane boosters blended into gasoline to increase the performance of a vehicle.

Gasoline consumption in Europe’s major consuming nations has been fairly flat in the last ten years, with current 2017 data showing that the steady levels look set to continue into 2018.

In 2017, the UK announced a ban on all petrol and diesel commercial cars from 2040, following on from other European countries including France, which also intends to ban petrol and diesel vehicles by 2040, and Norway, which plans to ban all fossil fuel-based vehicles by 2025.

This could in theory reduce gasoline demand in Europe. However, MTBE and ETBE players anticipate that the ban will have more of a long-term effect on the market, with limited impact expected in 2018.

Adding a level of uncertainty to 2018 is the recent surge in crude oil prices to over $60/bbl, with questions remaining over whether this will be sustained heading into 2018.

As well as tracking Eurobob gasoline values, the MTBE and ETBE markets closely monitor crude oil fundamentals.

At the end of 2017, demand was expected steady for 2018, with one source saying that demand levels for 2018 would depend on the amount of buying interest from Latin America.

According to one market player, demand from Venezuela is expected to slip while Mexico’s is set to increase.

However, another market participant said that Venezuelan demand for the octane booster is still going strong, while Mexican buying interest is expected to remain generally stable in the next year.

There are no dramatic changes expected to affect European production of MTBE in 2018. One source said that supply is expected to remain balanced.

Nevertheless, a separate source anticipated a long market in 2018, citing less outlets for oxygenates as a key factor.

Any demand from Latin America is not expected to counter healthy stock levels in Europe, added the source.

With the recent push from European governments to move away from diesel consumption, one trader suggested that this may increase gasoline use, and therefore push up demand for octane boosters including ETBE.

But the source added that if this were to happen, it would be more of a gradual increase, rather than a sudden surge, with little affect likely to be seen in 2018.

The majority of producers who can switch between MTBE and ETBE in Europe intend to continue producing MTBE rather than ETBE in 2018, according to the trader, meaning stable supply of ETBE is expected for the next year.

In general, 2018 is expected to be a slow and steady year for ETBE.

Pictured: A pollution-free zone sign in Germany

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