Asia is currently short of MTBE, and is likely to remain undersupplied in 2009 as well. Although the supply-demand balance favors the start-up of new capacities in the region, few MTBE producers in Asia are eager to invest in new plants, citing a cloudy outlook for the industry.
MTBE's poor reputation among environmentalists, growing competition from biofuels as well as easy substitution possibilities for end-users, have thwarted the growth potential of this business.
Environmental concerns have taken toll on MTBE use around the world. MTBE is a blending component which was originally designed to replace lead as an "anti-knocking" agent in gasoline. Like ethanol, MTBE is an oxygenate, used an octane booster for gasoline.
Despite its benefits over lead, MTBE fell out of favor in the US after it was detected in groundwater, stemming from leaking gasoline storage tanks. Like the US, Japan, Taiwan, New Zealand and Australia have shifted away from MTBE on similar concerns, choosing to use octane boosters like toluene, xylenes, ETBE and TAME instead.
MTBE has been identified as a potential carcinogen, although reports from the World Health Organization suggest insufficient evidence to classify the compound as a carcinogen.
"Unfortunately MTBE has built up a bad reputation. It has a strong smell and it's also easily detectable, making it a convenient scapegoat. Other toxic products in gasoline could be harder to detect in the environment," an industry spokesperson added.
With the world pushing to reduce dependence on fossil fuels in favor of biofuels, the outlook for MTBE has been further dented. In Thailand, policy makers are curbing the use of MTBE because of economic and political factors, choosing to go with "gasohol," gasoline blended with 10% locally-produced ethanol.
From the vehicle engineering perspective, vehicle designers still prefer ethers like MTBE and ETBE over alcohols. "Ethers are safer octane boosters from the engine performance angle, since alcohols can be corrosive for the rubber and plastic parts in older engines," an industry source in Asia said.
In the petrochemicals industry, methyl methacrylate producers in Asia, utilizing the isobutylene route to manufacture MMA, employ MTBE as a key feedstock. MMA is a monomer used to produce the transparent plastic polymethyl methacrylate, a substitute for glass. MTBE consumption in Asia's petrochemicals sector is expected to balloon by over 200,000 mt/year this year, boosted by new startups in South Korea and Singapore.
MTBE demand from the gasoline sector is still promising in East Asia. It is used extensively in China, South Korea, and Southeast Asia's gasoline markets.
Market participants expect to see sustained growth in gasoline consumption within the region, meaning gasoline blenders will need more MTBE this year.
While MMA producers in Asia are stuck with using MTBE, gasoline blenders, by far the largest users of MTBE in Asia, have the freedom to choose other gasoline blendstocks if MTBE prices become too uneconomical.
"The situation is straightforward for us. If MTBE is affordable, I use it to blend. Otherwise, I can sell my gasoline, or maybe consider using other blendstocks. I can simply stop blending if the MTBE market is bad," a gasoline trader and blender said.
"We have been trying to convince our management to invest in expanding MTBE production capacities, or even build new ones. However, the outlook for MTBE is far from clear, which is why they are hesitating," a source based in Southeast Asia said.
MTBE's poor reputation among environmentalists, growing competition from biofuels as well as easy substitution possibilities for end-users, have thwarted the growth potential of this business.
Environmental concerns have taken toll on MTBE use around the world. MTBE is a blending component which was originally designed to replace lead as an "anti-knocking" agent in gasoline. Like ethanol, MTBE is an oxygenate, used an octane booster for gasoline.
Despite its benefits over lead, MTBE fell out of favor in the US after it was detected in groundwater, stemming from leaking gasoline storage tanks. Like the US, Japan, Taiwan, New Zealand and Australia have shifted away from MTBE on similar concerns, choosing to use octane boosters like toluene, xylenes, ETBE and TAME instead.
MTBE has been identified as a potential carcinogen, although reports from the World Health Organization suggest insufficient evidence to classify the compound as a carcinogen.
"Unfortunately MTBE has built up a bad reputation. It has a strong smell and it's also easily detectable, making it a convenient scapegoat. Other toxic products in gasoline could be harder to detect in the environment," an industry spokesperson added.
With the world pushing to reduce dependence on fossil fuels in favor of biofuels, the outlook for MTBE has been further dented. In Thailand, policy makers are curbing the use of MTBE because of economic and political factors, choosing to go with "gasohol," gasoline blended with 10% locally-produced ethanol.
From the vehicle engineering perspective, vehicle designers still prefer ethers like MTBE and ETBE over alcohols. "Ethers are safer octane boosters from the engine performance angle, since alcohols can be corrosive for the rubber and plastic parts in older engines," an industry source in Asia said.
In the petrochemicals industry, methyl methacrylate producers in Asia, utilizing the isobutylene route to manufacture MMA, employ MTBE as a key feedstock. MMA is a monomer used to produce the transparent plastic polymethyl methacrylate, a substitute for glass. MTBE consumption in Asia's petrochemicals sector is expected to balloon by over 200,000 mt/year this year, boosted by new startups in South Korea and Singapore.
MTBE demand from the gasoline sector is still promising in East Asia. It is used extensively in China, South Korea, and Southeast Asia's gasoline markets.
Market participants expect to see sustained growth in gasoline consumption within the region, meaning gasoline blenders will need more MTBE this year.
While MMA producers in Asia are stuck with using MTBE, gasoline blenders, by far the largest users of MTBE in Asia, have the freedom to choose other gasoline blendstocks if MTBE prices become too uneconomical.
"The situation is straightforward for us. If MTBE is affordable, I use it to blend. Otherwise, I can sell my gasoline, or maybe consider using other blendstocks. I can simply stop blending if the MTBE market is bad," a gasoline trader and blender said.
"We have been trying to convince our management to invest in expanding MTBE production capacities, or even build new ones. However, the outlook for MTBE is far from clear, which is why they are hesitating," a source based in Southeast Asia said.
