Profit of Isomerization MTBE Units Reversed Losing Streak

After the New Year’s Day holiday, China’s MTBE prices kept rising, lifting the profit of the isomerization MTBE units. Currently, the theoretical profit of isomerization MTBE units in Shandong surpasses RMB 460/mt, and the overall profit of isomerization MTBE units is fairish.

After the New Year’s Day holiday, China’s MTBE prices kept rising. Up to January 11, the MTBE prices in northern China increased by RMB 600-750/mt from January 1, 2018. Besides, the MTBE market was relatively moderate in southern China, and the MTBE prices grew by RMB 400-500/mt.

As for the MTBE supply, MTBE producers were active in cutting the inventory before the New Year’s Day holiday, and the spot supply of MTBE tightened gradually. Therefore, MTBE producers were reluctant to sell MTBE resources with low prices. In terms of the demand for MTBE, the export quota of refined oil in 2018 had issued. Hereinto, the export quota of gasoline reached 6,550kt. Thus, the demand for MTBE from the gasoline market obviously increased.

At the beginning of January 2018, State Administration of Taxation (SAT) issued a notice about the consumption tax regulations for refined oil, resulting in the highly attention from market participants. Meanwhile, as most traders held that the operation cost would grow, market participants started to stock up intensively. Sales of MTBE recovered greatly, and some producers even controlled the sales volume.

Besides, the international crude oil prices gave support to the increase of the MTBE prices. The turmoil in Iran has not ended, and the demand for crude oil, according to the monthly report of EIA. Therefore, most market participants held optimistic sentiment towards the international crude oil market, and the international crude oil price climbed near $65/bbl. According to API, the crude oil stock crashed, and the output of crude oil in the U.S. dropped accidentally. Thus, the international crude oil prices rose greatly, giving support to the market sentiment.

Supported by the increase of the international crude oil and China’s MTBE prices, the profit of the isomerization MTBE units in Shandong finally reversed its losing streak. Currently, the theoretical profit of isomerization MTBE units in Shandong surpasses RMB 460/mt, and the overall profit of isomerization MTBE units is fairish. However, the feedstock supply from Northwest China is quite tight, and it is tougher for producers to purchase feedstock. Therefore, MTBE producers are not able to raise the operating rate to obtain more profit.