US methanol spot rates climbing on short supply - sources

16 July 2009 21:28  [Source: ICIS news]

HOUSTON (ICIS news)--US methanol contract rates appear to be heading for another spike in August due to rising spot prices on the back of short spot supply in the US Gulf coast (USG) region, sources said on Thursday.

“This price run-up appears to be driven by production issues and cost pressures, not demand,” a US distributor said.

However, one seller disagreed with a potential contract price rise, saying it would rather keep contract rates lower to boost buying activity.

Spot prices have risen approximately 3 cents over the past week to 61-64 cents/gal (203-213/tonne, €144-151/tonne) FOB (free on board) USG, according to data from global chemical market intelligence service ICIS pricing.

Southern Chemical Corporation (SCC) and Methanex nominated North American contract rates for July at 64-68 cents/gal, respectively.

July contract rates were up from a four-month long price stalemate, where both marketers SCC and Methanex hung prices at 60 cents/gal FOB.

“There is no growth, demand is dead, but prices are going up,” a USG-based methanol trader said.

With domestic manufacturing down and a weak global economy, a US distributor noted that methanol purchasers are feeling the sting of short western hemisphere supply, which stemmed from a plant turnaround in Trinidad and Tobago.

That particular plant outage, combined with reduced rates elsewhere, led a major producer to buy into the spot market to cover its shorts heading into August, sources said.

Methanol is a key feedstock for several downstream manufacturing components, including melamine, methyl methacrylate (MMA) and formaldehyde.

($1 = €0.71)

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By: Steven McGinn
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