USES

Methyl tertiary butyl ether (MTBE) is a fuel additive used to boost the octane value in gasoline, helping it burn more completely and reducing particle emissions from tailpipes.

MTBE can also be used to make high-purity isobutylene, which can be further processed to make butyl rubber, highly reactive polyisobutylene, methyl methacrylate (MMA) and other smaller derivatives. MTBE is also used as a solvent and extractant.

SUPPLY/DEMAND

US production of MTBE sank to around 17m bbl in 2017 from over 45m bbl in 2005 due to its phase-out in the US domestic gasoline pool in favour of corn-based ethanol. US-produced material is primarily exported to international gasoline markets, with chief destinations being Mexico, Chile and Venezuela.

In March, the US exported 120,860 tonnes of MTBE, with Mexico accounting for around 96,000 tonnes and Chile taking in 24,845 tonnes. Through the first quarter of 2018, the US exported 392,145 tonnes, down by 9% from last year due to a turnaround at LyondellBasell.

Supply in the US has steadily increased since 2010, as production margins remained favourable due to exports from the remaining producers.

With virtually zero demand in the US – save for specialty fuels – demand has increased in Asia and Mexico due to population growth. Refinery outages and problems at production sites in Venezuela and Mexico have also added to demand growth in those countries.

Market sources said suppliers are bringing product from Europe and blending with gasoline in the US Gulf Coast for distribution to Mexico and Latin America. Middle East-produced material is also heard to be making its way to the Americas region.

US producers tend to maximise MTBE production capacity due to favourable margins.

 

PRICES

US MTBE prices track movement in the Amsterdam/Rotterdam/Antwerp market, with US pricing at around a 10-15 cents/gal premium to the ARA market. ICIS assessed MTBE at 239.25 cents/gal on 11 May, closing at a three-year high on multi-year highs in the upstream crude oil and gasoline futures complex.

The European market is the key driver of prices in the US Gulf production region since US market demand for MTBE is virtually non-existent. Asia MTBE prices rose to above $860/tonne FOB (free on board) Singapore in mid-May, a level unseen in the past three years, on firmer gasoline prices and higher bids in the open trading market.

TECHNOLOGY

MTBE is manufactured by the chemical reaction of methanol and isobutylene. The reaction can take place in either a liquid phase or mixed gas-liquid-phase reactor that contains an acidic ion exchange resin. Alternatively, sulphuric acid can be used as a catalyst.

The reaction takes place at a temperature range of 50-90˚C (122-194˚F) and a pressure of 20 bar. The resulting product mixture is then distilled to get high-purity MTBE.

OUTLOOK

US MTBE spot prices are expected to remain firm heading into the summer driving season, as the gasoline and crude oil futures complex continues to lead the oxygenate market upwards. Octane supply remains tight, adding further upward pressure.

MTBE’s phase-out in the US led to producers finding new global markets for material. The US local ban shortened supply but has led to favourable margins.

US producers include: Huntsman (Port Neches, Texas), TPC Group (Houston, Texas), Enterprise Products (Mont Belvieu, Texas), and LyondellBasell (Channelview, Texas).

Producers are looking to capitalise on the long-term needs of the global market, setting up export growth expansion. LyondellBasell announced plans to double its butyl ether production at its Channelview site. The company is building a $2.4bn propylene oxide/tertiary butyl alcohol (PO/TBA) project in Channelview for completion in 2021.

It will have capacities of 470,000 tonnes/year of PO and 1m tonnes/year of TBA. The TBA will be converted to MTBE and ethyl tertiary butyl ether (ETBE) at its Bayport Complex near Pasadena, Texas.

Enterprise Products is building up its high-purity isobutylene production at its Mont Belvieu site by installing a new 425,000 tonne/year isobutene dehydrogenation (iBDH) unit.

The iBDH plant is expected to be completed by the end of 2019. Company officials in 2017 said the iBDH facility is designed to increase production of isobutylene for the production of lubricants, rubber products and alkylate for gasoline blendstock, as well as MTBE for export.

Additional reporting by Trixie Yap in Singapore and Joseph Chang in New York