Europe Q4 methanol set for rollover-to-€25/t fall

19 September 2008 16:56  [Source: ICIS news]

LONDON (ICIS news)--The fourth-quarter European methanol contract is set for either a rollover or a fall of €25/tonne (10.7 cents/gal) from the third quarter price of €295/tonne, depending on players’ views on availability, buyers and sellers said on Friday.

 

“There is no room for argument to bring the prices up or to bring the prices down,” a trader said.

 

While there has been no evidence of a post-summer pick-up in demand, there have also been no opportunities to rebuild stocks, an importer said.

 

“The market is looking for stability,” the supplier added.

 

Despite unanimous acknowledgment of financial turmoil feeding bearish sentiment in many markets, Asian demand for methanol remained "pretty strong", particularly into the fast-growing energy sector of dimethyl ether (DME), the importer added.

 

Another trader said: “With high energy prices, we will never get below $200/tonne again [on methanol]. The market is not long.”

 

While European consumption failed to reach expected levels, contractual volumes were being fulfilled, he added.

 

The consumer side was still vying for a decrease on sluggish European demand, the weakening energy and financial sectors, new capacity and expectations that the market will be "pretty long" next quarter.

 

“We have requested a slight reduction in the range of €270/tonne,” a contract buyer stated.

 

Added a producer: “Our feeling from talks we have had, some consumers hope to get €10-20/tonne lower [than in quarter three],” while a reseller said: “Overall the trend is very negative.”

 

Spot values were falling in China and US sellers were struggling to secure bids this week, he added.

 

Spot activity in Europe was taking place around €260/tonne, down €18/tonne from 10 days ago, according to global chemical market intelligence service ICIS pricing.

 

The third-quarter contract price was agreed at €295/tonne ($421/tonne) FOB (free on board) Rotterdam, although discounts are typically applied.

 

European methanol producers include Mider Helm, SDO and BIOMCN.

 

($1 = €0.70)

 

For more on methanol visit ICIS chemical intelligence

To discuss issues facing the chemicals industry visit ICIS connect 

By: Caroline Howard
+44 20 8652 3214

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