SunSirs: Weak Costs and Demand, China MTBE Market is Weak in December

According to the Commodity Market Analysis System of SunSirs, the domestic MTBE market is operating weakly. From December 1st to 27th, the price of MTBE first fell from 6,575 RMB/ton and then rose to 6,555 RMB/ton, with a price drop of 0.30% during the cycle and a maximum amplitude of 3.52%. The price increased by 8.57% year-on-year.

In terms of cost and crude oil, in December, the international crude oil futures market first fell and then rose, with an overall weak consolidation. In the first half of the month, macro level, global economic data remained weak, and the market generally expects to maintain the current interest rate policy unchanged, possibly starting to lower interest rates in March next year. On the supply and demand side, the increase in finished oil inventories in the United States last week exceeded expectations, especially the surge in gasoline inventories, which exacerbated the bearish sentiment in the market towards fuel demand. In addition, the Organization of the Petroleum Exporting Countries and its allies (OPEC+) have not tightened their production cuts as expected by the market. The expectation of loose supply has put pressure on oil prices. In the second half of the month, the sustained rebound in oil prices was mainly affected by geopolitical tensions. In the medium to long term, the supply-demand game remains the main logic of transactions: on the supply side, OPEC+deepens production cuts, and the expected increase in US production will show a trade-off. On the demand side, the depreciation of the US dollar and the expectation of a Fed rate cut will boost oil prices. Overall, the short-term impact of the geopolitical situation on oil prices will continue to explore upward space, while the medium to long-term supply and demand will exacerbate the wide range fluctuations in the oil market.

In terms of demand and gasoline, there has been little change in the operation of domestic main refineries, while the supply remains stable. With the widespread cooling and rainy and snowy weather in many parts of China affecting travel, coupled with the lack of holiday support and the loss of air conditioning oil support, the demand for gasoline has decreased, and some businesses are not actively purchasing, resulting in a downward trend in gasoline prices. Short term MTBE demand is influenced by bearish factors.

On the supply side, facilities such as Shenyang Wax Chemical, Dongying Qifa, Haite Weiye, Debao Road, and Qingzhou Tianan are still in shutdown. The Dongying Shenchi facility was temporarily shut down on December 17th, while the Lihua Yiisobutane dehydrogenation facility was temporarily shut down on December 17th, resulting in a significant decrease in production compared to the previous month. The short-term Dongying Shenchi and Lihuayi isobutane dehydrogenation units are about to return to normal.

In terms of external trading, as of the close on December 26th, the closing price of the Asian MTBE market has decreased by $6/ton compared to the previous trading day, while FOB Singapore closed at $845.24-847.24/ton. The closing price of the US MTBE market increased by $18.56/ton compared to the previous trading day, while the FOB Gulf offshore price closed at $913.19-913.55/ton (257.24-257.34 cents per gallon). The European MTBE market is closed.

In the future market forecast, there is an expectation of an increase in resource supply, and in terms of gasoline terminal demand, it will soon usher in the New Year holiday. Business owners have a certain enthusiasm for replenishing inventory. SunSirs MTBE analysts believe that the domestic MTBE market is mainly characterized by narrow fluctuations in the short term.

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