China demand drives US methanol price hikes - Methanex CEO

28 October 2010 22:44  [Source: ICIS news]

HOUSTON (ICIS)--Recent US methanol price hikes stem from low production levels in China, the top executive at global producer Methanex said on Thursday.

Methanex and Southern Chemical Corp (SCC) this week nominated a range of 129-133 cents/gal ($431-444/tonne,   €315-324/tonne) for November contracts, marking the third-largest monthly increase in three years.

The higher US rates come from increasing methanol exports to China, said Bruce Aitken, Methanex chief executive, in a conference call.

"A key reason for this is that the Chinese methanol industry has continued to operate at modest rates despite increasing prices," Aitken said.

He added that Chinese prices continue to rise because of low inventory levels in the country's 250 methanol plants, partly due to the effect of emissions controls set by the government to reach greenhouse gas targets.

"At the same time, methanol demand in China has continued to grow strongly and imports have stayed at high levels to satisfy this demand," Aitken added.

Also, emissions controls set by the government to reach greenhouse gas targets have impacted a number of the country's 250 methanol plants, he added.

Aitken also confirmed that Methanex buys and sells about as much methanol now as it produces, putting the ratio of its trading to production at 50:50.

"We're buying wherever we can find it today," Aitken said, adding that the company generally purchased from traders.

He would not specify on where the trading was being done except to say Methanex was not buying material in China. North American sources have speculated in the past month that Methanex was buying and selling.

Shifting his attention to South America, Aitken said he was disappointed that the lone Methanex plant running in Chile continued at a low operating rate because of problems in obtaining a steady natural gas supply for the plant.

The company's methanol units in Chile have been running significantly below capacity since Argentina started limiting cross-border supplies to the firm in 2009.

Aitken said he expected the plant to continue running at its present low rate for the next 12 months.

($1 = €0.73)

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By: Lane Kelley
+1 713 525 2653



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