Asia MTBE supply to lengthen in Dec as new capacity comes on stream

Author: Keven Zhang

2019/11/20

SINGAPORE (ICIS)--Asia’s methyl tertiary butyl ether (MTBE) supply is expected to lengthen in December as a new capacity in Malaysia is due to come on stream.

“We project many cargoes arriving in December, including regular shipments from the Mideast and PETRONAS,” a trader said.

Malaysia’s PETRONAS Pengerang Refinery and Petrochemical (PRefChem) has planned to start up in December its new MTBE plant with a nameplate capacity of 750,000 tonnes/year.

The company is now conducting test runs at its butadiene (BD) unit, the immediate upstream process unit of MTBE.

The MTBE plant start-up is likely to switch the Malaysia’s market position fundamentally, from a net importer to a net exporter of the material.

In August, its MTBE imports stood at 39,213 tonnes, against exports of 4,810 tonnes.

A 15,000-tonne parcel from the Middle East will be loaded around end-November, with multiple discharge ports along the Singapore straits.

From China, two parcels - 5,000 tonnes and 2,000 tonnes - were loaded in H2 November for a southbound voyage, with destinations in southeast Asian countries.

“Those prompt cargoes were expensive as they were priced in higher at an earlier point, while the current blending margins were still not too bad,” a trader said.

Spot MTBE prices in Singapore were at $717/tonne FOB (free on board) Singapore on 19 November, with premiums fluctuating between the mid- to high-teens over quotes on a CFR Singapore basis.

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The spread between 92 RON gasoline and naphtha was more than $12/bbl, while the break-even point for blenders to buy naphtha was $10/bbl.

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The long supply outlook is dampening market players’ sentiment over 2020 term negotiations.

A few contracts were discussed or signed with lower premiums compared with 2019 contracts, market sources said.

Focus article by Keven Zhang

Photo: Gasoline pump. Around 95% of MTBE is used as an octane booster and as an oxygenate in gasoline. (Source: Imagine China/Shutterstock)