By Zhao Han, Sinopec Tianjin Petrochemical
Supply
1. Capacity
China’s methyl tert-butyl ether (MTBE) progressively reached saturation between 2018 and 2022, with a slow growth in capacity (See Figure 1). The expansion of new energy and electric vehicles, along with a slowdown in the output of refinery products, have recently impacted on traditional gasoline market. In addition, the self-supply equipment of refining-chemical integration, low purchase MTBE demand, and obvious MTBE overcapacity have all contributed to weak construction initiative of MTBE equipment and shrinking capacity growth.
Figure 1 The variations of China’s MTBE capacity and capacity growth from 2018 to 2022
Due to the increased strain on marketing and sales and weak development motivation caused by MTBE overcapacity, new processes have not been developed for MTBE in recent years. Furthermore, the refining-chemical integration in the leading position of the future gasoline market with MTBE supplied by conventional equipment makes it hard to make advances in MTBE processes. Dehydrogenation and conventional procedures will therefore continue to dominate the production of MTBE, while heterogeneous process will be progressively eliminated.
China’s oil refining is aiming to achieve 20% of refining-chemical integration in the future. And before 2030, refining-chemical integration and diversification will be the primary themes domestically. The majority of new-built MTBE equipment will be refining-chemical integration equipment in the latter phase and single units of MTBE equipment will not be built.
China’s total MTBE capacity in 2022 was 20 810 000 t/a, with top ten enterprises holding capacity of 5 235 000 t/a (See Table 1), accounting for 25.16% nationally. Regarding regional differences, Shandong province played a significant part with a capacity of 3 335 000 t/a, occupying 16.03% totally, since Shandong province dominated fuel consumption in MTBE downstream with an apparent production distribution close to consumption places.
2. Output
Judging from the comparison between China’s MTBE output and capacity utilization from 2018 to 2022 (Figure 2), both of which have high correlation coefficient of 0.93. The 2020 public health event that reduced output and operation, and ethanol gasoline output increasing in 2019 made a hard hit to MTBE industry and plants start-up motivation, with a small fall in operation. However, the launch of units from Hengli Petrochemical Co., Ltd. and Zhejiang Petrochemical Co., Ltd. increased the output, leading to a production rise in 2019 despite a decline in operation. Other years’ output was upward, followed by increasing capacity utilization relevantly. Soaring crude oil price and imports left capacity utilization and output jump to the peak within five years.
Figure 2 The comparison between China’s MTBE output and capacity utilization from 2018 to 2022
Consumption
China’s MTBE apparent consumption climbed year by year from 2018 to 2022 (Except for 2022), with compound growth of 4.83% in five years (See Figure 3). Domestic MTBE consumption as of 2022 achieved 14 092 600 tons, down 5.74% from 2021. As for prices, MTBE price in recent five years have dropped initially and increased later, vibrating from RMB6 000 to 7 400 per ton. In 2020, restricted terminal production and a plunge in MTBE price were all influenced by public health event. And from 2018 to 2021 MTBE made big profits in downstream market, and thus MTBE price fluctuation had no clear impact on MTBE consumption. In 2022, the surging exports mainly led to the decrease of MTBE apparent consumption.
Figure 3 The comparison of China’s MTBE apparent consumption and price from 2018 to 2022
MTBE consumption had a slight fluctuation in downstream which was mainly occupied by blended fuel, which accounted for 93% to 95% between 2018 and 2022 (See Figure 4). In recent years, the gasoline consumption growth has also increased the amount of MTBE used for gasoline. For chemical use, chemical demand has somewhat decreased as a result of a slowdown in downstream high-purity isobutene growth and a poor demand for raw materials. At the same time, with the strict environmental protection inspection, the demand for solvents has decreased a little, followed by a slight decrease in the proportion of other aspects.
Figure 4 The consumption comparison of China’s MTBE downstream from 2018 to 2022
MTBE market forecast
Supply: prominent MTBE overcapacity reduced capacity growth of new-built MTBE equipment, with a growth expected to be 1.02% from 2023 to 2027. And the majority of new capacity is from refining-chemical integration equipment and PO-MTBE equipment of Befar New Material Co., Ltd., while little capacity is launched by new-built equipment. And heterogeneous equipment maybe phased out due to consistent losses and low output.
Demand: From 2023 to 2027, though some refining-chemical integration equipment will be constructed, booming new energy vehicles will occupy some traditional gasoline markets, resulting in little change in gasoline consumption. However, some equipment is still projected to be put into production before 2025, with a slight increase in the apparent consumption of MTBE. With the ensuing demand reduction, plus the increasingly fierce domestic competition, the market may greet a new round of shake-ups. And MTBE demand will decline after 2025, facing another price competition.
Price: In 2022, MTBE price rose to a decade-high level due to a surge in crude oil and exports. However, some outdated equipment will be on the verge of being phased out due to shrinking export profits and the local refineries in the integration from 2023 to 2025. Coupled with the promotion of new energy vehicles and electric vehicles, the gasoline price was expected to be downward. And with the construction of 742 000 t/a large-scale equipment of Befar New Material Co., Ltd. in 2024, the MTBE market was bound to be more fierce. Therefore, MTBE market will be expected to be hit by many bearish impacts, which might decrease the price (see Figure 5).
Figure 5 China’s MTBE average price and price forecast from 2018 to 2027
