Jason: From Argus Media, this is "Driving Discussions," a podcast series focusing on the forces affecting North American road fuels. Greetings and salutations one and all, Jason Metko with you yet again, associate editor of U.S. Products here at Argus. And on today's edition, we're catching up with our senior methanol and MTBE reporter, Steven McGinn.
Steven, good to see you, my friend. It's been quite a while since we've had you on the presentation, so good to get you back. Last time we talked, New Mexican President, what have we seen in the last six months or so?
Steven: Yeah, Jason, it's good to be back. Good to be back on the podcast here. Well, you know, the market continues to eye the startup and run rates of the Olmeca refinery down in Mexico. You know, it's really hard to gauge operational status, and PEMEX keeps it pretty tight-lipped on the refinery, but it is operating. How much gasoline are they producing? Stats aren't too clear, but again, what we do know, it is running. And a real good barometer are those exports of gasoline and finished gasoline to Mexico and their intake of MTBE.
So what we do know, again, and have seen MTBE movements from the U.S. to Mexico last year, 2024, continue to rise, and these are the stats from January to November of last year. And then the U.S. sent 1.4 million tons of neat MTBE to Mexico, and that's up about 9%, 10% from 2023 from about, like, 1.3 million tons from the same time frame, January 23 to November 23.
So Mexico, intake of MTBE continues to rise. And again, what this shows is that those movements, as they continue to rise, we're seeing a lot of that. The reason why is, you know, there's the expanded capacity of Lyondell's Channelview plant in Texas, which started up at the beginning of '24, and it's just showing that they continue to need MTBE. And the more they make gasoline in Mexico, the more octane enhancement they're going to need.
So again, remember, if we go back a few podcasts ago, we talked about Mexico requiring MTBE to use for its octane enhancement in its three largest cities, Mexico City, Monterrey, and Guadalajara, and those three cities account for almost two-thirds, about 60% of the country's gasoline demand.
So, you know, looking forward to 2025, even beyond, you know, barring an unexpected, unconventional policy shift, I expect MTBE exports from the U.S. to continue, you know, rising, you know, down to Mexico. So we'll see what '25 looks like, you know, especially with two new administrations taking hold, with Trump taking office, and then Mexico's new President, Claudia Sheinbaum, settling in and adjusting to the new leader for her northern neighbor.
Jason: Brings up a good talking point too. What, if any, are we going to see with looming tariffs Trump has proposed, and how could that affect movements of MTBE?
Steven: That's a good question. It's difficult to predict, you know, what Donald Trump is going to do, but I expect, you know, Mexico, they're not going to place and enforce any kind of tariff on MTBE sent from the U.S. You know, as we discussed, you know, earlier, MTBE is too substantial and too important of a product for Mexico's gasoline supply to play political football with. It's just too substantial. They need it. The U.S. makes it. And we're going to see... I predict that we will not see any kind of interference on the tariffs there.
Jason: He is a certified prognosticator and our MTBE expert here at Argus. Steven McGinn on this edition of "Driving Discussions." Okay, let's talk specifically Mexico here and Sheinbaum, who's been on the job now for about half a year. What's her long-term fuel policy?
Steven: Yeah, you know, their continued aim as laid out by Mexico's previous administration is to cut fuel imports. And just this week, the high-level plan was unveiled by Sheinbaum in their "Plan Mexico." So the country is planning to invest $100 billion in state-owned PEMEX over the next 6 years and attract nearly $300 billion in investment. Key projects include converting a petrochemical complex in Veracruz into a refinery and petrochemical hub. And that project was initiated under former President AMLO. And the plan targets a 10% growth in Mexico's chemical and petrochemical sectors by 2027. What they want to do is reduce imports by about $14 billion in those industries. Again, it's a continuation of their long-stated goal to reduce their fuel imports.
Jason: Okay, so if that's the case and you're wanting to get off the tap of MTBE coming from stateside, what does that mean for MTBE, especially produced up here?
Steven: Well, as of now, there's no plans for PEMEX to invest in MTBE production. Chemical projects are long-term plans and long-term investments, which means at least for the next few years, they'll continue to depend on the U.S. for octane enhancement. And again, like I said earlier, unless there's a jarring shift for PEMEX and Mexico's oxygen-up policy, I expect MTBE exports from the U.S. into Mexico to keep rising and the U.S. to continue being the primary source for Mexico's MTBE.
Jason: Steven, as always, we appreciate the time, my friend. And let's get you on here in another six months, see if these predictions and these prognostications have come true.
Steven: Thank you, Jason. It's always a pleasure.
Jason: He's our senior methanol and MTBE reporter, Steven McGinn. And with that, we'll conclude another edition of "Driving Discussions," a production of Argus Media, a leading independent provider of pricing and commodity market information.
Reminder to check out the previous episodes in our series. And for the latest with methanol and MTBE, we encourage you to subscribe to the weekly "Argus Media Octane and Blending Components Report" and the daily "Argus Media Mexico Fuels Report."
