European MTBE factor hits highest February average since 2016

London — The European MTBE market has kicked off the year more bullishly than usual, with the MTBE factor's average for February at its highest for the month since 2016, mostly supported by export activity.

The factor -- the relationship of gasoline blendstock MTBE and spot Eurobob barges price -- was assessed at 1.279 Friday, taking the February monthly average to 1.241, the highest February average since 2016, when it was 1.3, S&P Global Platts data shows. The factor was assessed at 1.298 on February 25, its highest point in the month.

The MTBE factor usually takes a hit during February, before picking up again later in the year, ahead of the spring gasoline specification change from winter to summer grade.

The high factor was driven by firm buying interest in the Amsterdam-Rotterdam-Antwerp hub. Higher MTBE prices in the US Gulf have supported the increase and large flows from ARA to the US Gulf were seen at the close of 2019.

The strong demand seen for both duty paid (T2) and unpaid (T1) MTBE came on the back of high values for octane boosting components and MTBE was still very expensive, a blender said.

A producer described MTBE demand in January and February as very strong, "following the firm demand seen in Q4 2019, which was very much export-driven."

EU exports of MTBE exceeded imports in December by around 63,500 mt, reducing the price difference between the two trans-Atlantic pricing hubs, Northwest Europe and the US Gulf, Eurostat data released last week showed.

The EU exported around 75,400 mt of MTBE in December, from just below 29,000 mt in December 2018 and around 14,250 mt in November.

Most of the exported material ended up in the US, with the country buying almost 44,500 mt from Europe, ahead of Turkey at 15,000 mt.

The MTBE factor is calculated by dividing the MTBE spot price by the Eurobob gasoline spot price. The MTBE price was assessed at $568.25/mt FOB ARA Friday, with Eurobob at $444.35/mt. The premium of MTBE over the Eurobob gasoline front-month swap was last calculated at $125.50/mt on Friday.

US Gulf Coast spot MTBE prices were last assessed 4.43 cents/gal lower at 176.06 cents/gal FOB USG (around $619.65/mt), coinciding with weaker front-month NYMEX RBOB futures and assuming an unchanged premium over RBOB of 35 cents/gal (around $124.25/mt).