European MTBE firms, held by weak US demand
Date: 04-Sep-01
Country: UK
Bids for MTBE, a gasoline blending component which reduces harmful emissions, were last pegged at $335 a tonne, with offers standing well higher at $245.
Last week prices were around $235/$240. In August they have generally climbed, from below $300 in late July.
"MTBE in Europe is pretty hot," said a trader. Traders said that the switch from high sulphur to low sulphur fuel had kept European demand healthy.
Although the change in specifications to a cleaner burning fuel, requiring more MTBE, is not taking place until October, traders said producers were already working on blending.
Sentiment has remained bullish with Eurograde gasoline barge prices climbing as high as $274 a tonne this week, amid a string of refinery shutdowns and good demand.
Prices for the oxgenate blending component, which often makes up about eight percent of each tonne of gasoline to make it cleaner burning, are closely linked to the motor fuel.
They said that prices would have risen further but for a weak U.S. market.
"It's not good for MTBE in New York. There's not much demand for reformulated gasoline (RFG), only for conventional grades," a trader said.
The U.S. government's Department of Energy said RFG stocks fell by 2.1 million barrels last week, a smaller draw than the 6.2 million barrel fall in gasoline stocks.
This meant that the arbitrage for MTBE to the U.S. was unlikely to open, traders said. Asian prices held steady this week in thin trade, with plenty of material available.
