APLA '07: Methanol swings mask US housing woes

18 November 2007 17:23  [Source: ICIS news]

By Stephen Burns

BUENOS AIRES (ICIS news)--The recent surge in methanol prices has masked the impact on downstream demand caused by the contraction in the US housing sector, a methanol marketer said on Sunday.

Downstream consumers "are horrified by the volatility in methanol", the source said.

But the tightness in global methanol supply in recent months has tended to hide the impact on demand of the housing woes, the source said on the sidelines of the annual Latin American Petrochemical Association (APLA) meeting in Buenos Aires.

Production problems have sent methanol prices soaring in the last three months.

The US Gulf spot barge price was at $2.85/gal ($948/tonne) last week, compared with low-to-mid 80 cents/gal in August, according to data from global chemical market intelligence service ICIS pricing.

Methanol is a feedstock for formaldehyde, which is used extensively in the construction of new homes.

US housing starts fell 10.2% in September from August to register a 14-year low. The September seasonally adjusted annual rate of 1.327m units was also down a whopping 30.8% from a year earlier.

The Commerce Department will issue October data on housing starts on Monday.

By: Stephen Burns
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