Europe spot methanol rises on Chinese demand

14 April 2009 17:06  [Source: ICIS news]

LONDON (ICIS news)--Spot values for methanol in Europe moved higher this week because of a diversion of Middle Eastern product into China, market sources said on Tuesday.

“The spot price is on the rise, but I don’t know how long it will last. Those on the buying side in the market are importers,” said a European producer.

“People are still buying because they expect Asia will get higher,” confirmed a broker.

Importers said that better netbacks into the Chinese market had led to a diversion of product from the Middle East into Asia, leaving them with obligations to fulfil in the European market.

A flurry of activity had seen European spot values edge up from €118-127/tonne ($157-169/tonne) at the beginning of the month to €140.50/tonne FOB (free on board) Rotterdam, according to data from global chemical market intelligence service ICIS pricing. 

Chinese spot values were pegged at $235-245/tonne CFR (cost and freight) as strong demand pushed prices higher than in recent weeks.

There was some concern that the bull run was not sustainable, however.

“I’m not sure if these levels are sustainable, it all depends on China. China still has a lot of thrust, but there are some worrying signals,” said a Europe-based trader referring to high inventories on the east coast of China.

There were also concerns that current market levels may prompt Chinese coal-based producers to restart production in light of more favourable economics, which could cause the market to fall sharply again. 

“It could collapse at any time, and if China collapses so will the rest,” the trader added.

($1 = €0.75)

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By: Shelley Kerr
+44 20 8652 3214

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