European MTBE prices were slipping Tuesday from a relatively high value against eurobob gasoline with an absence of demand from Asia on limited blending interest also likely to weigh, sources said.
The MTBE factor fell to 1.1502 on Monday, down from the January high of 1.1882, assessed by Platts on January 28.
According to some sources, the value of the oxygenate as a proportion of eurobob gasoline was too high.
In Tuesday's market, sources pegged the factor at 1.14-1.16 against the Eurobob February swap of approximately $845/mt FOB, market sources said.
Taking Monday's factor of 1.15, this would imply an outright MTBE price of around $972/mt, down $8/mt on Monday's MTBE assessment of $980/mt FOB ARA.
MTBE is assessed at a factor -- effectively a percentage ratio -- to Eurobob gasoline to reflect the economics of blending the component into the road fuel.
"It is a seasonally strong price, given where we are [prior to the switch to summer spec gasoline], an industry source said. "It is way above blend value at [around] 1.06-1.07."
Although demand was described as healthy in the Mediterranean and South America and supplies were viewed as balanced-to-tight, sources said Asian demand had cooled off due to the Chinese Lunar New Year holiday period.
Another source said that although the market is on the whole balanced, some sources had built inventories in anticipation of higher prices but were now keen to sell.
"People had built a bit of inventory [in January] in expectation of higher numbers and this did not materialize. Also Sabic Europe selling recently, that took out a little bit of steam out the market," a second industry source said. "I wouldn't be surprised if it traded at close to 1.14."
"Factors are a little high," the source added. "There is some room to fall and naphtha is still cheap."
European naphtha prices were pricing at a relatively similar price to eurobob gasoline barges, limiting demand for high octane components such as MTBE.
Gasoline blend value is the value of a gasoline component to be blended, relative to the outright gasoline price.
