Pharma-Grade MTBE: Prices Climb as Methanol Futures Spike

Key Highlights

• Price Update: Domestic MTBE prices increased by ₹2/kg; current offers range between ₹101-103/kg (Ex-Mumbai/Lote).
• Retail Rates: Barrel prices vary from ₹111-115/kg depending on location and credit terms.
• Feedstock Surge: Methanol futures rose to $292-300/MT, contributing to MTBE price hikes.
• Demand Snapshot: Pharma-grade MTBE demand remains subdued at 3 KT/month, but recovery is anticipated.
• Global Developments: Natural gas prices rose by 5.87%, and FOB China MTBE prices increased to 5460 RMB/MT.
• Outlook: Stable to rising prices predicted; buyers should consider securing supplies before December price hikes.

MTBE Prices: Latest Updates

• Domestic manufacturers have recently increased the prices of pharmaceutical-grade MTBE (Methyl Tertiary-Butyl Ether) by ₹2/kg.
• Current offers stand at ₹101/kg (Ex-Mumbai) for cash payments. Importers have similarly raised their prices to ₹102/kg (Ex-Mumbai) for cash payments.
• Traders, on the other hand, are offering prices between ₹102-103/kg (Ex-Lote), with 30-day credit terms.
• For retail buyers, the prices of intact barrels vary as follows:

1. ₹111-113/kg barrel load(Ex-Mumbai)
2. ₹114/kg barrel load (Ex-Kandla)
3. ₹115/kg barrel load (Ex-Hyderabad and Ex-Ahmedabad)

All prices include 30-day credit terms.

• The rise in MTBE prices is primarily attributed to an increase in the feedstock methanol futures market.

• Methanol CFR China Future Contract Prices:

A. 2H Nov 2024: $292/MT (up by $4) B. 1H Dec 2024: $299/MT (up by $6) C. 2H Dec 2024: $300/MT (up by $6)

MTBE Market Dynamics: Demand & Supply

• MTBE is extensively used in India, with 70% of its demand coming from gasoline blending applications. Pharmaceutical-grade MTBE accounts for 20% of the demand, mainly in bulk drugs and intermediate manufacturing. Monthly demand for pharma-grade MTBE is approximately 3 KT, while gasoline blending consumes about 40 KT.
• Domestic manufacturers such as Vinati Organics Ltd. and Savla Chemicals Ltd. collectively produce about 2 KT of pharma-grade MTBE per month. The remaining demand, approximately 0.2-0.5 KT, is met through imports.
• Currently, the demand for pharma-grade MTBE is subdued due to reduced operations by bulk drug and intermediate manufacturers, driven by weak downstream demand. However, demand is expected to rebound after the CPHI Exhibition in December 2024. Despite the low demand, MTBE prices have risen, influenced by the increasing costs of feedstock such as isobutylene and methanol.
• Looking ahead, the contango structure of methanol future contracts (CFR China) suggests a higher production forecast for MTBE in the near term.

Market and Plant News: Global Market Trends & Updates

• Globally, natural gas prices have spiked by 5.87% to $3.31/MMBtu. Methanol feedstock (CFR China) prices are currently at $292/MT. Meanwhile, FOB China prices for MTBE have risen by 12.5 RMB to 5460 RMB/MT.
• Tianjin Soda, a leading acetic acid manufacturer in Lingang, China, resumed operations on 14th November 2024 after a shutdown on 6th November 2024. The plant has an annual production capacity of 350 KT of acetic acid.

Expert Opinion: Industry Insights & Recommendations

• Industry experts predict that MTBE prices are likely to remain stable in the coming months due to elevated feedstock prices and an anticipated surge in pharma-Bulk drug demand. Buyers are advised to explore inventory opportunities, as MTBE prices are expected to increase further from December 2024.This could be an ideal time to secure MTBE supplies in anticipation of rising costs.