The European MTBE market is currently at a tipping point, as market players wait for the start of Dangote’s residue fluid catalytic cracker (RFCC) unit in Nigeria. With the start of the RFCC unit, the refinery will be able to provide additional gasoline supplies to the domestic markets, and thus potentially impacting gasoline exports from Europe and Asia. MTBE has been one of the octane blendstocks of choice for gasoline blenders looking to export gasoline to Africa, the Mediterranean, the Middle East, and Latin Markets.
The majority of Europe has shifted or is shifting to increase renewable fuel usage and electronic vehicle adoption. ETBE has seen increased usage in Europe as it counts toward the biofuel mandates, but heavily competes with ethanol and other renewable fuels. However, MTBE blending has remained strong in Europe as the region exports gasoline to countries that allows for MTBE in the gasoline mix.
Several things need to be aligned for blenders in Europe to consider MTBE in the gasoline mix. For one, there needs to be gasoline export demand from countries that allow for MTBE. And second, MTBE needs to be at an advantage versus other blending components and blending margins need to be positive.
Europe has seen high amounts of MTBE blending since 2022 due to high gasoline to naphtha differentials, which incentivize the blending of naphtha and high-octane components. In 2024, the gasoline to naphtha differentials were lower, but still much higher than previous years, and thus still providing support for MTBE blending.
The uptick in MTBE blending and reduced MTBE production across Europe, led to the region importing MTBE from China, the Middle East, and the US.
The chart below displays what regions imported gasoline from Europe. The US was removed from the chart as it mainly imports a pre-ethanol gasoline mix.
You can see that Africa represents a large portion of European gasoline exports and has underpinned MTBE blending in Europe. Drilling it down a bit further, Nigeria represents 40-45pc of total Africa exports.
In 2023, Africa imported 637,000 b/d of finished gasoline, while Nigeria imported 284,000 b/d according to global trade analytics platform, Kpler.” To put into perspective, the 650,000 b/d Dangote refinery, will have the capability to produce up to 358,000 b/d of gasoline according to the company. If that is the case, it could affect up to 45pc of gasoline exports to Africa or 20pc of total European gasoline exports. If all gasoline shipped to Nigeria has 10pc MTBE, this will represent a loss of 1.2mn t to 1.5mn t of MTBE demand in Europe. However, a blend of 10pc MTBE is not always the case as blending is not always favorable.
Where does the European MTBE market stand now?
Dangote expects to start its RFCC unit by November. The company halted exports of fuel oil, a feedstock for the RFCC, in late August, suggesting that they were building supplies in anticipation of the start of the RFCC unit. However, new data suggest that the refinery is again shipping the fuel oil in late October. Whether there is a delay of the RFCC unit or opportunistic selling is unclear.
In the meantime, Europe continues to ship normal volumes of gasoline to Africa, but traders are cautious of sending MTBE volumes to Europe as it is not certain when we could see an impact from the Nigeria refinery.
The MTBE factor to Eurobob gasoline has recently increased from 1.20 in early October to 1.24 in November. There is a possibility that with the lack of MTBE imports and a further delay in the start at the refinery that we could see short term strength in Europe MTBE prices in the weeks ahead. However, weak blending margins is keeping the MTBE factor from going to much higher levels.
Europe will continue to see pockets of MTBE demand from the Mediterranean, especially during the summer months.
Rotterdam MTBE prices are currently $100/t over both US and Singapore prices. On paper it looks like Europe is poised to import more MTBE, but shippers are staying on the sidelines.
Feedstock availability
Europe is currently seeing isobutylene shortages due to the refinery and olefin crackers closures, and weak olefin margins throughout the region. There are more expected refinery and olefin cracker closures expected through the end of the decade. As a result, Europe has not been able to produce enough MTBE to meet the blending demand, and therefore has been importing from other regions. Some European producers are solely focusing on the production of ETBE. ETBE production in Europe has also been affected by the lack of isobutylene feedstock.
The expected reduction of MTBE blending in Europe, will offset the current shortage of European MTBE supplies and cause imports to decline in 2025.
This article was created by an Argus octane blending expert using data and insights from Argus Octane Blending Outlook and Argus MTBE and ETBE Analytics.
Author name: Roel Salazar, Lead Consultant, Fuels and Octane
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