Asia MTBE negotiations in a standoff; outlook uncertain
Petrotahlil - Asia’s methyl tertiary butyl ether (MTBE) discussions were in a stalemate amid weak downstream gasoline market while upstream crude prices are rising.
Spot prices on an FOB (free on board) Singapore basis are fluctuating at the $388-417/tonne range in the week.
Premiums for CFR (cost and freight) Singapore were at a historical low of $5-9/tonne over FOB Singapore quotes.
Singapore’s combined May and June MTBE imports stood at 110,172 tonnes - less than its monthly average in January and March 2020.
Trading volumes in July and August will likely stay curbed as economic recovery in Asia remains questionable.
Gasoline blenders were hesitant to buy MTBE as there was sufficient gasoline being produced straight from refineries in the region.
Refineries were ramping up operation over May and June after countries eased lockdown measures as coronavirus cases were plateauing.
The gasoline crack spread against Brent crude oil in Asia was hovering this week at near-zero levels - at minus $0.80/bbl to plus $0.76/bbl - as gasoline prices fell.
Crude prices are firm, supported by a larger-than-expected drawdown in US inventory and a weaker US dollar.
Actual drawdown in US crude oil inventory stood at 7.4m barrels, according to the US Energy Information Administration (EIA), more than double the 3.0m-barrel decline expected by analysts.
With market players expecting Brent crude oil to fluctuate in the $45-50/bbl range, MTBE sellers betting on strong crude were less willing to let go of their cargoes at a lower price.
Fixed-price spot MTBE offers for September shipment were at $440-450/tonne CFR China, against bids at $430/tonne CFR China.
China’s monthly MTBE imports stood at an all-time high of above 160,000 tonnes in May and June but are expected to decline significantly in July and August.
Hoping that less supply could render some support to Asia’s MTBE market, sellers were either maintaining their fixed-price offers or offering on a floating-price basis.
“Many cargoes are around, but they all wanted to sell in floating price,” an importer said.
From a buyer’s standpoint, there was no hurry to procure supply since a floating-priced cargo is accompanied with unpredictable risks.
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Source : ICIS
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