EPCA ’08: Quarterly methanol seen as best option

28 September 2008 11:08  [Source: ICIS news]

MONTE CARLO (ICIS news)--A negotiated quarterly European methanol agreement is better than the alternatives despite its faults, said representatives of major buyer Dynea on Sunday.

“We like the contract price system better than the alternatives,” said Tarje Braaten, the company’s vice-president of procurement, on the sidelines of the annual European Petrochemical Association (EPCA) meeting.

“We definitely don’t want posted prices.”

The quarterly contract system came under fire earlier this year following massive swings in the price from quarter to quarter as changes in perceived market dynamics saw spot movements move out of line with contract settlements.

Since a €195/tonne ($287/tonne) price fall in price in the second quarter, however, contract values have stayed steady.

“These last few months [of stability] have given the contract price a longer life,” said Braaten, adding that if the market had continued to endure violent price swings throughout this year, the contract price may already be history.

After a rollover in the third quarter, an initial agreement on the fourth quarter contract was also agreed at a rollover of €295/tonne FOB (free on board) Rotterdam last week.

The figure was not yet widely accepted in the market, with large volume buyers indicating that they were not prepared to support the agreement as a €10-20/tonne decrease would be more appropriate given current and forecasted supply and demand through the quarter.

($1 = €0.68)

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By: Shelley Kerr
+44 20 8652 3214

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