Concentration of MTBE Production Is Enhanced

By Yang Hongbo, Sinopec Chemical Commercial Holding Company Limited

MTBE (methyl tert-butyl ether) is a main blending component for increasing the octane number of gasoline. It is also an important chemical raw material for the production of butyl rubber and MMA (methyl methacrylate). With the improving quality of oil products and the growth of the downstream chemical industry, the MTBE sector in China has developed steadily. Compared with 2010, the apparent consumption of MTBE in 2013 was 38% higher, the output was 55% higher and the price was 22% higher. In 2014, however, the price of MTBE started a drastic slide, and considerable changes also took place in production processes and market structure.

Production

The average annual growth of the MTBE capacity in China was 16% during 2009-2012, and it exceeded 20% during 2013-2015. Capacity added, by year, was 1.86 million t/a in 2013, 1.99 million t/a in 2014 and 1.92 million t/a in 2015. After the completion of production units in 2015, the rate of capacity growth is expected to drop to below 5% in the future. Unlike previous years, most of the new capacities have no matched downstream units of oil products and chemicals, and the sales amount of MTBE is therefore increasing constantly. The output of MTBE in China is also increasing. The average growth of MTBE output reached 14.6% during 2009-2014, but the operating rate of production units was only around 60%.  
The capacity of MTBE in China has grown drastically, but its geographical distribution is quite concentrated, mainly in Shandong, Liaoning, Jiangsu, Guangdong and Heilongjiang. The capacity in these regions accounts respectively for 37%, 9%, 7%, 6% and 5% of the national total.

Technology

In recent years, production technology for MTBE in China has presented a trend of greater raw material diversity, larger production unit scale and higher yield. Production processes used in MTBE units already in production include the C4 process, the aromatics isomerization process and the isobutane dehydrogenation process.
First of all, the raw material cost in production units has fallen constantly. Due to the high price of raw material C4, the average price of MTBE produced through the traditional C4 process was RMB6 633/t in 2014. As the price of raw material after-etherification C4 was around RMB300/t lower than the price of mixed C4, the average price of MTBE produced through the aromatics isomerization process was RMB6 318/t in 2014. As the price of raw material clean gas was around RMB200/t lower than the price of after-etherification C4, the average price of MTBE produced through the isobutane dehydrogenation process was RMB6 102/t in 2014. Based on the ratio between raw material input and product output alone, the cost of MTBE units using the aromatics isomerization process was RMB196/t lower than the cost of MTBE units using the C4 process in 2014, and the cost of MTBE units using the isobutane dehydrogenation process was RMB321/t lower than the cost of MTBE units using the C4 process.  
The yield is also higher and the production unit scale is larger. The yield of MTBE units using the traditional C4 process is only 40% and the production unit scale is mostly around 100 kt/a. In contrast, the yield of MTBE units using the aromatics isomerization process or the isobutane dehydrogenation process is 50-60%, the production unit scale is basically around 400 kt/a and the economies of scale are therefore quite evident.

Supply and demand

In terms of supply, the total capacity of MTBE producers making commercial sales was 4.57 million t/a in 2013 and 6.33 million t/a in 2014. Forty nine producers made such sales in 2013. There were 31 producers with individual capacity below 100 kt/a, and their combined capacity was 1.52 million t/a, accounting for 33%. There were 16 producers with individual capacity of 100-300 kt/a, and their combined capacity was 2.15 million t/a, accounting for 47%. There were 2 producers with capacity above 300 kt/a, and their combined capacity was 900 kt/a, accounting for 20%. A total of 56 producers made commercial sales of MTBE in 2014. There were 28 producers with capacity below 100 kt/a, and their combined capacity was 1.44 million t/a, accounting for 23%. There were 22 producers with a capacity of 100-300 kt/a and their combined capacity was 3.50 million t/a, accounting for 55%. There were 3 producers with capacity above 300 kt/a, and their combined capacity was 1.40 million t/a, accounting for 22%. The capacity of MTBE units expected to start production after 2015 in Huntsman Jinling and Yantai Wanhua is 740 kt/a, respectively. Due to economic factors, MTBE units with a capacity below 100 kt/a will be gradually phased out. The MTBE sector in China will therefore see a trend toward fewer producers and greater production unit scale.
In terms of demand, the consumption of MTBE in producing gasoline in major refineries (Sinopec, PetroChina, CNOOC, ChemChina, Yanchang Petroleum and SinoChem) was 4.43 million tons in 2014, and of the total, the amount purchased from outside sources was over 1.00 million tons. The consumption of MTBE in producing gasoline in local refineries was 1.00 million tons, and of the total, the amount purchased from outside sources was 200-300 kt. The amount of MTBE purchased for gasoline blending in society was around 1.20 million tons. Beginning in 2014, the central government and local governments have issued policies to regulate gasoline blending behavior. The amount of blended gasoline in major refineries is on the increase, and the amount of MTBE purchased from outside sources is going up accordingly. The amount of blended gasoline in the rest of society has fallen rapidly, and the amount of MTBE purchased is also coming down.

Import and export

Owing to the capacity growth, the import volume of MTBE in 2014 was 4% less than in the previous year.  The export volume of MTBE was 26 kt, an increase of 30% over the previous year. The amount of MTBE exported from China is expected to reach 290 kt in 2019.