NewsFlashInitial Q2 methanol settled down €195/t

27 March 2008 18:05  [Source: ICIS news]

LONDON (ICIS news)--An initial second-quarter methanol contract has been agreed at €295/tonne ($460/tonne), down €195/tonne from the first quarter on ample supply and a weak spot market, a BASF company source said on Thursday.

The initial agreement was reached between BASF and producer Statoil on a FOB (free on board) Rotterdam basis.

“This is only the first settlement. I assume that all consumers will follow, but some sellers may still have their problems,” the BASF source said. “I think this is a good market price in relation to prices in the US and Asia. We can become competitive again."

Producers had been holding out for a price in the mid-€300s/tonne, saying that they preferred not to overshoot the decrease for fear of another big swing in the third quarter following a €110/tonne hike from the fourth quarter of 2007 to the first quarter.

Buyers were adamant from early on that the contract price should fall below €300/tonne, stating that they had been at a huge disadvantage after the first quarter price was settled up €110/tonne and the spot market swiftly fell back down to pre-contract levels and below.

Buyers said they were unable to pass first-quarter costs on to their customers due to the drop in spot values and that the second-quarter settlement should reflect this disadvantage.

($1 = €0.63)

For more on methanol visit ICIS chemical intelligence

By: Shelley Kerr
+44 20 8652 3214

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