Quake logistics compound China methanol rally

15 May 2008 08:27  [Source: ICIS news]

SINGAPORE (ICIS news)--Greater difficulty in transporting product from northwest parts of China to the east and south in the aftermath of the earthquake in Sichuan province have added to pressures fuelling a methanol rally, buyers and sellers said on Thursday.

The industry already faced low methanol inventories in the coastal areas and shutdowns at some large methanol plants in China together with rising coal prices, they added. 

Domestic prices have hit yuan (CNY) 4,100-4,200/tonne ($574-588/tonne) ex-tank in the east and south, said a seller.

Demand is very strong as buyers are trying to stock up material, a local methanol producer said.

'We are facing problems in transporting cargoes as railways and ships are being used by the government for disaster relief in Sichuan', he added.

Methanol producers in northwest China said their transportation to east and south China would be interrupted due to the ongoing quake relief operations.

Workable price ideas for imported cargoes were cited at $460-470/tonne CFR (cost and freight) China for prompt cargoes by various sources.

Prices in China had been surging in the past two weeks on the back of high feedstock coal prices and also coal shortage in some areas which had led to the closure of smaller methanol plants.

Meanwhile, talk of delays in some spot deals concluded earlier in the month were also supporting high prices.

"However, there is a fair amount of speculation in the market that is adding to the price spike", said a Chinese methanol distributor.

"For very prompt cargo I would be willing to pay $450-460/tonne CFR China but for June and July arrivals, this would be a big risk", he added.

Surging Chinese prices have also lifted regional price ideas in the spot market. Discussions in Taiwan for June cargoes were now above $380/tonne CFR Taiwan, up $30/tonne from early May, said a regional seller.

In Korea, spot discussions were around $440-450/tonne CFR Korea, up nearly $30-40/tonne from last week, said a methanol distributor.

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Sam Liang in Shanghai contributed to this article

By: Anu Agarwal
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