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MTBE factor spikes higher on export demand, octane shortage

A shortage of high octane components has seen the MTBE factor -- the ratio of the price of MTBE to Eurobob gasoline barges -- hit its second-highest value on record, according to Platts data.

A shortage of high octane components has seen the MTBE factor -- the ratio of the price of MTBE to Eurobob gasoline barges -- hit its second-highest value on record, according to Platts data.

The factor on Tuesday was 1.467, up from 1.401 on Monday. The record high was the 1.474 seen October 13.

Steady demand from the Mediterranean since late summer has caused the factor to stay at historically high levels beyond the summer season, when demand for MTBE usually peaks.

Most recently, demand from Baltic terminals has surfaced, squeezing the MTBE spot market further as turnarounds at Russian refineries persisted. This situation has been compounded by several refineries in Northwest Europe still been out for maintenance.

"Refineries are not producing enough [gasoline and components] and some petrochemical plants which take naphtha and produce aromatics are down," said a market source, looking at the northwest European supply balance.

"Octanes, octanes, octanes...is mostly what I hear," a market source said, referring to low availability of blending components and octane boosters.

The shortage of components was reflected in a strengthening of gasoline EBOB barges, whose premium to the front-month swap reached a three-week high Tuesday. FOB Rotterdam EBOB barges were assessed at $745.75/mt, a premium of $19.25/mt to the front-month swap, the highest value since October 13, when it was assessed at $31/mt, with the outright value at $815/mt.

"I believe everyone is pretty empty [of gasoline right now," a gasoline trading source said.

--Francesco Di Salvo, francesco.disalvo@platts.com --Thordur Gunnarsson, thordur.gunnarsson@platts.com --Edited by Dan Lalor, daniel.lalor@platts.com

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