Asian MTBE prices hit near 2-year high on Middle East feedstock supply uncertainty

Asian MTBE prices rose about 5% to a near two-year high March 3, with further increases expected in the near term, as the ongoing US-Iran conflict raised concerns over potential cuts to crucial feedstock supplies from the Middle East, several Asia-based producers and traders said March 4.

Platts, part of S&P Global Energy, assessed MTBE FOB Singapore up $39.13/metric ton day over day at $818.54/mt on March 3, marking the highest level since July 19, 2024, when it was assessed at $826.50/mt.

Although rising prices bode well for producers, concerns over the availability of key MTBE feedstock supplies -- naphtha and butane -- are quickly mounting, a China-based MTBE producer said.

"Asian [prices are] super strong, and Chinese producers also don't want to lower their prices," the producer said, adding that several Chinese refineries were considering cutting production.

While no producer has yet confirmed slashing production or canceling deals, fresh offers have been largely limited.

"We haven't lowered production again, but we have temporarily stopped quoting [offers to the market]," a second China-based MTBE producer said.

An Asia-based LPG broker said that the closure of the Strait of Hormuz has impacted butane supplies from the Middle East, which often transits through the strait, a key chokepoint for crude oil and LPG exports.

Platts assessed butane CFR North Asia at $779/mt on March 3, up $16/mt day over day, while butane FOB Arab Gulf was assessed at $596/mt, down $2/mt over the same period.

Straits demand eyed

Over the past several weeks, Chinese cargoes have been regularly heading to western markets such as Europe and Latin America, but the start of the conflict has brought European purchases to a complete halt, a Singapore-based MTBE trader said.

"Arbitrage [movement] to Europe is not possible with the war, as plants are struggling to meet domestic demand, so they won't offer any more cargoes for export," the trader said.

With European demand now out of reach, buying interest in the Straits has returned to focus, a Southeast Asia-based MTBE producer said, adding, "Arbitrage widened to the Straits last night [March 3], and the Straits are definitely shorter [on supplies]."

Platts assessed MTBE FOB China up $24/mt day over day at $729/mt on March 3, leading to a spread of about $90/mt to FOB Singapore prices, which the producer cited as a feasible level.

Although demand from the Straits region could rise, there may not be enough supplies available from Chinese producers, another Singapore-based MTBE trader said.

A buy tender for April-delivery MTBE was recently floated in Malaysia, but the second trader said that limited supplies from China, combined with ongoing flat-price volatility, were making it more difficult for sellers to take positions.

"Chinese producers could only offer end-April loaders, with nothing [available] for March [loading], but flat-price moves are occurring too quickly, so the margin of error is high," the trader added.

Concerns over naphtha

Extended disruptions in the Strait of Hormuz have threatened feedstock availability for Asian naphtha crackers, prompting operators to consider or begin reducing run rates, a Singapore-based naphtha trader said, with potential cuts in naphtha supplies rattling some South Korean producers.

"[South] Korean naphtha crackers heavily rely on Middle East naphtha and have no incentive to keep run rates [high]," a domestic naphtha cracker operator said, adding that the rise in naphtha prices has further dented production economics.

The Platts-assessed benchmark C+F Japan naphtha reached a near three-year high of $737.25/mt at the March 3 Asian close, up $21.75/mt day over day. The benchmark was last assessed higher at $741.75/mt on March 7, 2023, further squeezing petrochemical margins.

Naphtha cargoes for the first-half-April delivery are largely affected, two South Korea-based petrochemical end-users said, adding that they were cutting run rates as much as possible, with a shutdown possible amid Strait of Hormuz uncertainty straining Middle Eastern supplies.

South Korea's GS Caltex is lowering the operating rate of its naphtha-fed steam cracker in Yeosu by 20% from February levels to 63%-65% as of March 4, a company source said, with the run rate expected to remain at these levels throughout March due to reduced flows of crude oil and refined products from the Middle East.

South Korea imported 23.225 million barrels of naphtha in January, up 47.7% month over month but down 1.5% year over year, the latest Korea National Oil Corp. data showed. The country imported 237.532 million barrels of naphtha in 2025, down from 246.693 million barrels in 2024.