China MTBE Market Underperformed

The international crude oil prices fluctuated downward from the end of May, weighing down China’s refined oil prices. Thus, China’s MTBE prices kept dipping, and most market participants held bearish sentiment towards the MTBE market. Up to June 8, China’s mainstream MTBE dealing price reached RMB 5,900/mt, down RMB 650/mt from May 25.

As China’s MTBE market weakened, downstream users showed poor interest in purchasing resources. Therefore, the MTBE ex-works prices at refineries continued to go down. Besides, the decline in the MTBE prices in northern China was higher than that in southern China.

Up to June 8, the average dealing price of mixed C4 in Shandong was RMB 4,250/mt, down RMB 500/mt from May 25. Moreover, the mainstream average dealing price of C4R2 and iso-butane was RMB 4,350/mt and RMB 5,050/mt, down RMB 500/mt and RMB 200/mt respectively from May 25. Besides, the dealing price of methanol was about RMB 2,780/mt, down RMB 220/mt from May 25. On the whole, refineries continued to cut the MTBE prices in response to the low costs.

As for the operating rates, China’s MTBE units ran steadily. Up to June 8, the overall operating rate of MTBE units at independent refineries was about 52.60%. Therein, the 350kt/a alkane dehydrogenation unit at Shandong Dongming Petrochemical Group and the 200kt/a isomerization unit at Shandong Minghao Chemical were shut down for maintenance. Moreover, influenced by the SCO Summit held in Qingdao, most refineries suffered sales pressure. Therefore, the MTBE inventory climbed to a high level. Some refineries chose to cut the selling prices and output moderately in response to the sluggish sales.

In the near future, the downstream demand for MTBE will remain sluggish, giving thin support to China’s MTBE market. With the approach of the Dragon Boat Festival holiday, downstream users will replenish stocks ahead of schedule. Thus, SCI reckons that China’s MTBE prices will increase to some extent.