Sales Pressure on China MTBE Producers Increased

SCI99

2019-01-15

Sales Pressure on China MTBE Producers Increased

At the beginning of 2019, China’s refined oil market performed well. The prices of gasoline and its components kept rising. Up to January 11, the increment in the MTBE prices reached RMB 600/mt. However, with the MTBE prices increased to high levels, the sales pressure on MTBE producers started to show up.

Shandong Gasoline and Related Product Price Comparison

In January, China’s refined oil prices moved up, mainly as the international crude oil prices kept rising from the end of December 2018. Moreover, the operating rates of primary processing units at Shandong independent refineries inched up, and Sinopec purchased more resources from the market. Accordingly, the procurement for gasoline components increased. Besides, the prices (without tax) of 89 RON gasoline were obviously lower than those of gasoline, so downstream users preferred to purchase 89 RON gasoline and MTBE. Meanwhile, the MTBE inventories at producers were relatively low. Therefore, the MTBE prices continued to move up.

Currently, the trading atmosphere weakens, and downstream users show weak interest in operating. Meanwhile, the MTBE prices are high, exerting cost pressure on downstream users. However, the inventories at MTBE producers are low, and it is predicted that the international crude oil prices will continue to increase. Therefore, SCI reckons that MTBE producers will maintain stable offers in the short term. With the approach of the Spring Festival holiday, most MTBE producers will sell goods preferentially. In the long run, SCI estimates that China’s MTBE prices will fluctuate downward.

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