US methanol spot-to-contract price gap narrows - sources

04 June 2009 17:30  [Source: ICIS news]

HOUSTON (ICIS news)--Rising spot prices for US methanol have moved closer to contract price levels due to short supplies, which could lead to contract rates hikes for July, sources said on Thursday.

Spot prices stood at 57-59 cents/gal ($190-196/tonne, €135-139/tonne) FOB (free on board) USG (US Gulf), only 1-3 cents off from contract rates at 60 cents/gal FOB USG, according to independent chemical market information service ICIS pricing.

Early last month, spot rates ran at a 10-12 cent discount to contract prices.

“The market is moving up because of short supply and traders trying to cover obligations for June,” a US methanol distributor said.

A major producer was expecting to obtain methanol supplies from a new Petronas plant in Malaysia to address the shortfall, market producers said, but that plant has yet to come on stream, forcing the producer into the spot market to cover its short position.

But a US seller disagreed with that view, arguing that the company should not be short because of the decline in worldwide methanol demand.

“They should be balanced,” a North American seller said, adding that the global market has adapted to a fall in demand.

Major US methanol suppliers include Methanex, Southern Chemical Corporation, SABIC, Mitsubishi and BP.

($1 = €0.71)

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By: Steven McGinn
+1 713 525 2653

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