SunSirs: Multiple Positive Factors Drive Sharp Rise in China MTBE Prices

According to SunSirs' commodity market analysis system, as of July 13, the price of MTBE rose from 5,100 RMB/ton to 6,233 RMB/ton—a single-day increase of 15.17% and a gain of nearly 20% since the beginning of July. Significant upward adjustments in corporate quotes have driven a substantial surge in the MTBE market.

The drivers behind this sharp price increase include: rising costs; limited spot supply due to widespread plant shutdowns and reduced operations; increased end-user demand; and a continued rise in export contract volumes.

Regarding costs, international oil prices have risen. Key bullish factors include the announcement that the ceasefire agreement involving the US has ended, sparking market concerns over potential control of the Strait of Hormuz and renewed fears regarding supply risks.

On the supply side, persistent low profit margins have led various manufacturers to halt production or reduce operating rates. Consequently, the operating rate of MTBE plants has remained low—recently dropping to 40%—indicating a significant contraction in supply.

Regarding demand, rising temperatures across various regions have led to increased use of air conditioning in traditional fuel vehicles. Higher fuel consumption has boosted the baseline demand for gasoline. Additionally, with the end of the exam season and the arrival of summer vacation, the travel radius for residents has expanded significantly; this has improved sales at retail gas stations and fostered an active trading atmosphere, further boosting MTBE demand.

MTBE exports have also shown positive momentum, with a steady increase in signed export contracts. Many manufacturers have recently signed export deals, with volumes exceeding 150,000 tons since the start of July; these orders are primarily scheduled for shipment in late July, with a small number set for early August, injecting confidence into the domestic MTBE market.

In summary, the domestic MTBE market has experienced a significant rally driven by a combination of positive factors. However, the market's ability to sustain such strong gains will depend on downstream acceptance levels. SunSirs analysts anticipate that the domestic MTBE market will primarily undergo a period of consolidation with a bullish bias in the short term.

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