Heavy Pressure on China MTBE Industry from E10 Promotion

Heavy Pressure on China MTBE Industry from E10 Promotion

NDRC and other 14 committees and departments together issued the Implementation Scheme of Biofuel Ethanol Production Advancement and Ethanol Gasoline Promotion (FGNY[2017]No. 1508) on September 13, 2017, which first put forward that vehicle-use ethanol gasoline would be nationwide promoted by 2020. As long as the ethanol gasoline is nationwide promoted, the domestic demand for MTBE will crash due to the fully replacement. Accordingly, China’s MTBE output will obviously go down.

From 2014 to 2015, China’s fuel ethanol output was largely stable, as its output mainly depended on the downstream demand and the import. In 2016, the fuel ethanol output at some plants greatly dropped, curbed by the insufficient fund. From 2017 to 2018, China’s fuel ethanol output went up, as there were newly added units being put into operation and the demand for fuel ethanol increased to some extent. Supported by the surged import volume, SCI estimates that China’s fuel ethanol total supply volume will reach 2,930kt, up 518.7kt Y-O-Y. Recently, the approvals for fuel ethanol projects accelerate. Besides, most market participants hold bullish sentiments towards the demand for fuel ethanol in 2019. Therefore, SCI reckons that China’s fuel ethanol total supply volume will increase to 5,800kt in 2019.

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