China spot methanol heads for CNY5,000/t in June

27 May 2008 09:40  [Source: ICIS news]

SHANGHAI (ICIS news)--China methanol is poised to breach yuan (CNY) 5,000/tonne ($720/tonne) ex-tank east China next month on tight supply and high energy costs, producers and traders said on Monday.

Methanol prices have soared CNY1,100/tonne from early May to CNY4,750-4,830/tonne ex-tank east China, traders said.

“Some methanol plants shut down for turnarounds or reduced the operation rates due to power and feedstock issues, causing market supply tightness to some extent,” a company source from Shanghai Coking Methanol Plant said.

“From this year, the feedstock, such as coal, natural gas is rising continuously, so we have to increase our prices to mitigate the loss.

“I believe methanol price will hit CNY5,000tonne/year next month on the back of tight supply,” the source added.

Sichuan Vinylon Plant, a Sinopec subsidiary based in Chongqing, said its 350,000 tonne/year methanol plant was not affected in the earthquake in neighbouring Sichuan province, but its reduced its operation rate due to a shortage of natural gas.

Sichuan Jiangyou Methanol Plant shut down its methanol plant after the earthquake and the unit was still closed while Sichuan Lutianhua Corp was not running its plant at full rate, a local trader said.

Also pushing up the prices was the expectation that many end-users would buy methanol cargoes in advance of the Olympics Games as the government might limit chemicals transport, a producer said.

Prices of downstream formaldehyde were also rising in line with methanol, end-users said.

Formaldehyde prices increased by CNY150/tonne to CNY2,250-2,300/tonne ex-works(EXW) south China, traders said adding the price might break through CNY2,600/tonne in the future.

Dimethyl ether (DME) producers said they were under increasing pressure to raise prices to cover costs at present.

DME, also a downstream product of methanol, could be used as a substitute for liquefied petroleum gas (LPG).

($1 = CNY6.94)

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By: Judith Wang
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