Chinese methanol prices tumble on weak demand

22 March 2007 09:01  [Source: ICIS news]

SINGAPORE (ICIS news)--Chinese methanol prices have fallen sharply over the last three weeks due to weak downstream demand and ample domestic supply, market players said on Thursday.

Domestic prices were at yuan (CNY) 2,600-2,800/tonne ($336-362/tonne) ex-tank on Thursday, CNY1,400/tonne lower than early December.

Weak demand, particularly from the key downstream formaldehyde sector, weighed on methanol values, a Chinese methanol distributor said.

Local production has been extremely strong, he said, adding that domestic plants have been operating at high rates over the past few months due to high margins.

Weaker Chinese prices led to lower offers for Chinese exports, which were at $320-340/tonne FOB (free on board) China for better quality material, a southeast Asian trader said.

This was in stark contrast to December when such material was sold at $420-430/tonne FOB.

However, there were no buyers in the regional markets this week as most did not want to buy when prices were rapidly falling. Others said they had high inventories.

Prices would continue to fall until some producers operating high-cost units cut their output, said Asian methanol sellers.

Several Chinese methanol producers are using coal feedstock and many become uncompetitive when methanol prices drop below $200-250/tonne, they added.

($1 = CNY7.74)

By: Anu Agarwal
+65 6780 4359

< previous article(ICIS Chemical Business podcast November 2, 2009)

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