Europe Q4 methanol confirmed up €22/tonne at €277/tonne

15 October 2010 16:33  [Source: ICIS news]

LONDON (ICIS)--The European fourth-quarter methanol contract price has been confirmed up €22/tonne ($31/tonne) from the previous quarter at €277/tonne ($390/tonne), market sources said on Friday.

The price was agreed on free on board (FOB) Rotterdam basis, with the majority of key market players indicating they would follow the initial price agreed on 13 October.

Both producers and consumers said they were unhappy with the price, with the former considering it too low and the latter too high.

Those players that made the initial settlement said they had reached a compromise in order to end the prolonged negotiations, which many sources described as the longest they had ever seen.

“We’re not happy with the price, but we’re happy to have a price,” said a producer involved in the initial agreement.

“It was dragging on too long. I think the whole industry risked getting discredited,” a buyer was quoted as saying when the initial settlement took place.

Many of those not involved in the initial settlement indicated they would follow only after conceding they had little alternative.

“It’s very high compared to other regions. I think it’s unreasonable, especially with the euro/dollar exchange rate. How will demand develop with such a high price? But what choice do I have?” said a large buyer.

Producers were equally dissatisfied with the price, but for completely different reasons.

“We think it’s too low, given that prices in China are increasing so quickly and how we see [the fourth quarter],” said another key producer.

Sellers were all of the opinion that the fourth quarter would be tight, with global capacity struggling to match the rapidly increasing demand in Asia.

Producer Methanex indicated on Friday that it would also set its Methanex European Posted Contract Price (MEPCP) at €277/tonne.

($1 = €0.71)

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By: Ross Yeo
+44 208 652 3214

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