By Lu Jundian, Liu Xiaojie, Jia Ting, Sun Mengyao and Liu Ge, Shenyang Research Institute of Chemical Industry

Methyl tert-butyl ether (MTBE) is a kind of ideal blending component to produce lead-free, high-octane and oxygenated gasoline. In spite of disputes due to its harmfulness to the environment, MTBE can hardly exit market in a short term as currently there are no perfect substitutes. However, MTBE enterprises should upgrade technologies, lower production costs and reduce energy consumption, given the nation’s environmental policies, more intense competition, etc.

Production

From 2018 to 2022, compound growth rate of domestic MTBE capacity was 3.44%. Because of factors like decelerated gasoline consumption growth – an outcome of burgeoning NEV industry and the coronavirus – and overcapacity aggravation, growth of MTBE capacity slowed down to only 0.48% in 2022, when only one new unit (i.e. 100 000 t/a traditional MTBE unit of Wudi Xinyue) was put into production and domestic MTBE capacity totaled 20.81 million t/a, of which top 10 producers, boasting a combined capacity of 5.24 million t/a, took up 25.16%. See Figure 1 and Table 1 for more details.

Figure 1 China’s MTBE capacity and capacity growth during 2018-2022

By regions, Shandong boasted MTBE capacity of 9.17 million t/a in 2022, accounting for 44.07% of the total; Northeast China, 3.22 million t/a, 15.45%; East China, 2.82 million t/a, 13.53%. Northwest China, north China, central China and southwest China – four regions all with capacity of lower than 2 million t/a – occupied less than 10%, respectively. See Figure 2 for more details.

Figure 2 China’s MTBE capacity distribution in 2022

Domestic demand for MTBE and MTBE supply may both continue to grow slowly in 2023, as actual demand is not high owing to influence of the coronavirus and enterprises are unwilling to kick off new MTBE projects. China’s MTBE capacity is forecast to increase 0.86% YoY or 180 000 t/a YoY in 2023. In the next five years, capacity of projects under construction will reach 922 000 t/a (See Table 2 for more details). Currently, there are no plans to phase out MTBE capacity.

Market situation and forecasts

Domestic MTBE output and rate of capacity utilization were highly related during 2018-2022, and spurred by surging crude oil prices and import volume, both increased to five-year high in 2022, when domestic MTBE output was up 4.82% YoY to 15.2 million tons. Figure 3 shows China’s MTBE output and rate of capacity utilization during 2018-2022.

Figure 3 China’s MTBE output and rate of capacity utilization during 2018-2022

With a compound annual growth rate of 4.83% during 2018-2022, domestic apparent consumption of MTBE showed an upward trend, except in 2022. Soaring export volume dragged down apparent consumption of MTBE for 2022 by 5.74% YoY to 14.09 million tons. As for MTBE consumption in downstream sectors, more MTBE – up from 93% to 95% – was absorbed by gasoline industry, mainly attributable to rising gasoline consumption (See Figure 4 for more details). Demand for MTBE from chemical industry fell slightly. Other industries saw mild decrease in MTBE consumption, and environmental policies are a major reason.

Figure 4 China’s MTBE consumption proportion during 2018-2022

In the future, MTBE demand increments will be mainly from gasoline industry, capacity of which is forecast to increase 46 million t/a from 2023 to 2027. This will greatly stimulate demand for MTBE. Shandong Minghao Chemical Co., Ltd. constructed a 20 000 t/a high-purity isobutene project in 2022. In 2023, two 100 000 t/a high-purity isobutene projects of Shouguang Luqing Petrochemical and Yingke Chemical may start production. Domestic high-purity isobutene capacity is expected to reach 1.38 million t/a in 2027. Demand increments from chemical industry will be limited.

Prices

From 2018 to 2022, average MTBE price fell to a low of RMB4 070/t in April 2020, and rose to a high of RMB8 743/t in June 2022 (See Figure 5 for more details).

Figure 5 China’s MTBE price trends during 2018-2022

MTBE prices in 2022 increased first and then decreased, with the lowest price reaching RMB5 671/t in January, the highest reaching RMB8 743/t in June, and average price reaching RMB7 475/t. See Figure 6 for more details. MTBE prices in 2022 were generally higher than in previous four years, benefiting from export, rising prices of crude oil and gasoline. Due to oil prices decline, MTBE prices in 2023 are forecast to be lower than in 2022, with the year’s high to be seen in April and September 2023 and the year’s low to be seen in July 2023.

Figure 6 China’s MTBE price trends in 2021 and 2022

Import and export

Import volume of MTBE hit a five-year high of 797 300 tons in 2020, but fell 88.33% YoY to the lowest since 2018 of 55 600 tons in 2022, mainly because alleviation of the coronavirus led to rising international MTBE prices, which greatly reduced profits from importing and lowered import volume. See Figure 7 and Table 3 for more details. Domestic supply basically met demand for MTBE in 2022, and in the next five years, import volume is predicted to decrease continually.

Figure 7 China’s MTBE import volume and growth during 2018-2022

Export volume of MTBE fluctuated relatively mildly from 2018 to 2021, but in 2022, the volume skyrocketed to a five-year high of 1.49 million tons owing to many factors like export profits, no export quota restrictions, weak domestic demand, growing overseas market demand, etc. See Figure 8 for more details. With export profits reducing, MTBE export volume is forecast to drop in 2023, but from 2025 to 2027, it may rebound again to avoid domestic fierce competition. 

   Figure 8 China’s MTBE export and growth during 2018-2022