Uses

Around 95% of methyl tertiary butyl ether (MTBE) produced is used as an octane booster and oxygenate in gasoline.

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 a solvent and extractant, as well as a pharmaceutical agent to dissolve gallstones.

Supply/demand

2017 demand levels, as is traditional, generally depended on seasonality. Buying interest sees a boost in the summer, with the driving season between June and August providing the biggest lift in demand.

Q2 of 2018 saw less demand than is typical heading towards summer, attributed mainly to healthy stocks having been built up in winter in preparation for the high demand season.

Increased offtake was noted from Mexico through most of 2017 and into 2018. Though a lot of Mexican demand is fulfilled by US producers, European players saw an uptick in material leaving the continent for South America.

A spate of planned maintenances and unplanned production issues in the second and third quarters of 2017 meant MTBE supply was fairly tight for a large portion of the year, though healthy supply has so far been noted in 2018.

There was also a spike in European MTBE demand in September following Hurricane Harvey in the US, with many plants in force majeure in the country. As a result, imports to the EU slipped in October, with rising US prices making it a more attractive export destination.

Strong buying interest from the US continued into 2018 with several turnarounds noted in the nation, though this had mostly dried up by March. EU imports of MTBE were generally higher in 2017 than 2016, according to EU trade data, though there were significantly less imports in July, August and October than in 2016. In the first two months of 2018 there was a definite increase in imports of MTBE to the EU.

Prices

MTBE prices fluctuated in line with Eurobob gasoline in 2017 and into 2018, with gasoline in turn tracking crude oil prices. There was a typical lift in MTBE values in summer, particularly in July and into August, with a large uptick seen in September, during the aftermath of Hurricane Harvey and the resulting extra demand from the US. The factor against Eurobob gasoline stayed relatively strong for the majority of 2017, before tumbling down in October and November, amid a spike in crude and gasoline prices.

There was a lift in the factor again in March, amid robust trading activity, though this fell back down to generally low levels again after the switch to typically more expensive summer grade gasoline.

Outright prices spiked in early May following the announcement that the US plans to pull out of the joint Iran nuclear deal. This led to a spike in crude oil prices which in turn pushed up gasoline and MTBE values.

Technology

MTBE is produced when isobutene reacts with methanol over a catalyst bed. Either a liquid-phase reactor or a mixed gas-liquid-phase reactor containing an acidic ion exchange resin can be used for the process. Sulphuric acid can be also used as a catalyst.

The mixture obtained from the reaction is distilled to produce high-purity MTBE. MTBE can also be created as by-product from the propylene oxide (PO) process when tertiary butyl alcohol is dehydrated to isobutene.

Outlook

Players are hoping for an uptick in demand in the summer months, with the current oversupply expected to be consumed by rising buying interest during the peak driving season.

Strong demand is anticipated to remain until the end of Q3, when demand typically begins to wane with the approaching switch to winter grade gasoline.

In the mid- to long term, European countries’ shift away from diesel powered cars could have a positive effect on the MTBE industry, with gasoline powered cars anticipated to see more demand as a result.

In the long term, the increasing focus on electric vehicles (EVs) is calling into question the future of the gasoline market, particularly with bans on new petrol and diesel vehicles coming into force in countries including the UK and France from 2040, as well as plans for similar bans in other European countries.

MTBE demand is heavily dependent on the gasoline industry, with gasoline blending the most popular application for the octane booster in Europe. Any ban on gasoline powered vehicles would have a large impact on MTBE buying interest.