China MTBE Industry to Be Hit

According to sources, Sinopec announces that Sinopec’s marketing companies in Tianjin will upgrade all of the 92 Ron gasoline and 95 Ron gasoline to ethanol gasoline before September 30, 2018. Tianjin becomes the first city that clearly publish the time to promote the ethanol gasoline.

Currently, there are 12 provinces promoting ethanol gasoline in China. Hereinto, all the gas stations in Liaoning, Jilin, Heilongjiang, Henan, Anhui and Guangxi only provides ethanol gasoline. Moreover, the gas stations in Jiangsu, Hubei, Hebei, Shandong, Guangdong and Inner Mongolia can provide ethanol gasoline and normal gasoline. However, the consumption volume of ethanol gasoline only takes up 20% of China’s total gasoline consumption volume, and more than 93% of Chinese-made MTBE resources are used to rise the octane value. Once the ethanol gasoline is roundly promoted, China’s MTBE industry will be severely hit. Besides, if the policy is strictly carried out, SCI holds that the consumption volume of ethanol gasoline will take up about 80% of China’s total gasoline consumption volume. On the whole, the demand for oil blending-used MTBE will obviously decline after 2020, and SCI predicts that the annual average MTBE consumption volume will crash to 3,400-3,500kt.

Besides, SCI predicts that the demand volume of chemical-used MTBE will be lower than 800kt after 2020. Given the increment in the export volume, SCI estimates that the consumption volume of MTBE will be lower than 5,000kt in the future.

At present, most consumers are reluctant to purchase ethanol gasoline due to the high prices. Moreover, although refineries of PetroChina, Sinopec and other state-owned refineries promote ethanol gasoline compulsively, the private gas stations are reluctant to sell ethanol gasoline. Besides, if the ethanol gasoline is promoted nationwide, China’s fuel ethanol supply gap will be higher than 7,000kt. Therefore, market participants need to pay close attention to related policies.