US MTBE spikes to highest level since anti-pandemic measures enacted

Houston — The US spot MTBE price rose to its highest level since mid-March on June 22, prior to the implementation of lockdown measures as a result of the coronavirus pandemic.

Spot MTBE increased 7.70 cents/gal June 22 to be assessed at 135 cents/gal FOB USG, with a trade reported at that level during the Platts Market on Close assessment process. Gunvor sold 25,000 barrels of June 27-July 1 loading MTBE to LyondellBasell for 135 cents/gal during the MOC process. No other trades were reported during the day.

That assessment represents the highest value seen for spot US MTBE since March 11, when it was assessed at 141.03 cents/gal FOB USG, after having been on a downslope since the end of December 2019.

Declining demand for MTBE to be blended into gasoline for export to Mexico and Latin America added pressure during most of the first quarter of 2020. In the current quarter, the value of spot MTBE fell further and faster due to lockdown measures put in place to prevent the spread of the pandemic in the US, Latin America and Mexico.

As the value of spot MTBE fell, it flipped to a 15.55 cents/gal discount to the front-month value for feedstock methanol on March 23. As a result of negative product margins for MTBE, US producers began cutting production rates, according to sources, which served to tighten supplies. As a result, MTBE flipped back to a premium to feedstock methanol on April 24, when they reached plus 2 cents/gal and have trended higher since.

The return of some demand to the market from Mexico as the country bounces back from lockdown precautions has added support for US spot MTBE, as has higher export demand from Asia as an outlet for incremental volumes.

Fixtures reports on June 22 showed a 31,000 mt cargo of US MTBE fixed for export from the US Gulf Coast to China for the first half of July and a 38,000 mt cargo fixed for export from the USGC to Asia for the second half of June.