China MTBE Prices May Go down
Entering H2, 2020, China’s MTBE prices hovered at lows for a long time and went up in Q4, 2020. However, the bullish impacts gradually weaken.
China’s MTBE prices went up from H1 November, and the bullish factors were as follows:
First, the demand for gasoline improved, supported by the favorable procurement and export. State-owned refineries raised the procurement and export volume of gasoline from October. In H2, 2020, the overall unit operating rate was relatively high, and China’s gasoline supply kept rising with China’s oil refining capacity expansion. Accordingly, China’s gasoline prices hovered at lows for a long time. However, supported by the increment in gasoline export volume, the gasoline inventory at refineries dropped rapidly, so the demand for gasoline feedstock, such as MTBE and alkylate, greatly improved.
Second, supported by the tight supply and favorable demand, China’s MTBE prices went up. In H2, 2020, curbed by the ample gasoline supply, China’s MTBE prices mainly hovered at 3,500-3,800/mt. However, prices of iso-butane and C4 LPG hovered at highs. Accordingly, the overall profit from MTBE production was severely negative. Entering Q4, 2020, more MTBE units were shut down for maintenance. According to SCI’s statistics, the overall operating rate of MTBE units at independent refineries mainly hovered at 37% from mid-November, and MTBE output greatly declined. In November, China’s MTBE output totaled 917.2kt, down about 18% M-O-M. Although the overall MTBE prices went up, most refineries still purchase resources on a need-to basis. Meanwhile, most traders intended to sell goods preferentially, so the inventory at traders went down quickly. With the spot supply becoming tight, the downstream procurement enthusiasm improved somewhat, further lifting the MTBE prices.
