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Asian MTBE prices surge in typical low season to outpace gains in crude

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Asian MTBE prices started to rally unexpectedly this week -- during a seasonal weak demand period -- rising 1.74% over Tuesday-Thursday and outpacing a 1.4% rise in October ICE Brent crude futures over the same period.

MTBE prices were assessed at a four-month high of $1,227/mt FOB Singapore at 4:30 pm Singapore time (0830 GMT) Thursday, up $21/mt or 1.74% from $1,206/mt at the same time Tuesday, while October ICE Brent crude futures were at $116.14/barrel, up $1.60/b or 1.4% from $114.54/b over the same period.

MTBE prices have not been at this level since April 13, when they were assessed at $1,238/mt FOB Singapore.

Demand for MTBE in Asia rose this week on a pickup in blending demand in Singapore and South Korea for higher octane gasoline grades.

The MTBE factor to RON 92 gasoline, which measures the ratio between the daily assessments for MTBE FOB Singapore and 92 RON gasoline, was up 16 points from Tuesday to be assessed at 1.144 Thursday. On April 13, it stood at 1.101.

Benchmark RON 92 gasoline was assessed at $126.88/b at 04:30 pm Singapore time (0830 GMT) Thursday, up $0.37/b since Tuesday, and $6.21/b lower than its value on April 13.

The gasoline inter-RON spreads were as high as $8.95/barrel for 92-97 RON and $5.68/barrel for 95-97 RON this week.

Supply of MTBE in Asia is very tight at present and sellers have mostly remained on the sidelines this week waiting for prices to move higher. Buyers from South Korea and Singapore were said to be actively looking for 2,000-3,000 mt lots, while another buyer was said to be looking for a significantly larger quantity for arrival before the end of September.

We are a potential seller but not offering at this point; we are waiting to see reasonable bids, a trader said.

The supply of MTBE in Asia has been curtailed in August as producers in the Middle East opt to move cargoes to Europe instead, where MTBE prices are currently $212/mt higher than in Asia.

Supply of MTBE is limited; anything before the 20th [September] is tight, a trader said.

Asian supply of MTBE has also been affected by limited vessel availability in the region, with Chinese producers facing problems loading.

Adverse weather conditions have curtained the number of vessels entering the region, with some vessel owners unwilling to make the back-haul voyage to China. Typhoons have disrupted loading and discharge schedules in the region, resulting in delayed and short tonnage.

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