FocusSE Asia methanol to spike on Petronas' FM, Kaltim plant outage

20 July 2010 06:12  [Source: ICIS news]

By Nurluqman Suratman and Heng Hui

SINGAPORE (ICIS news)--Supply-side pressure may cause methanol prices in southeast Asia to spike this week, following a force majeure at Petronas’ Labuan facility in Malaysia and a plant outage at Indonesian producer Kaltim, market sources said on Tuesday.

Spot methanol prices had been stable for the past two weeks at $245-255/tonne (€189-196/tonne) CFR (cost and freight) SE Asia, according to data from ICIS.

Petronas had declared a force majeure on methanol shipments from its 2.36m tonne/year production facility in Labuan on Friday, as supply of feedstock natural gas was cut, said a company source.

"We've stopped production at the two lines... and expect the gas supply to resume by Friday," said Gilbert Tan, an operations and planning manager at the facility.

Technical problems at Murphy Oil’s Kikeh field caused the feedstock supply disruption at the Labuan plant, he said.

Petronas, which has a 1.7m tonne/year and a 660,000 tonne/year methanol lines at the site, supplies about half the requirement of southeast Asia for the material, based on industry estimates.

Meanwhile, Indonesia’s sole methanol producer Kaltim also had to shut operations at its 660,000 tonne/year plant in Bontang last Friday due to mechanical problems.

Normal production at the plant would likely resume on 25 July, which would translate to a production loss of 18,500 tonnes, said a company source.

The regional market was left this week with only one plant in operation - Brunei Methanol Company’s 850,000 tonne/year, market sources said.

Methanol goes in making of formaldehyde - a preservative and glue like substance for making resins, methyl tertiary butyl ether (MTBE) and acetic acid.

($1 = €0.77)

Read John Richardson and Malini Hariharan’s blog – Asian Chemical Connections
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By: Nurluqman Suratman

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