US methanol observers expect rollover in December contract

17 November 2010 21:35  [Source: ICIS news]

HOUSTON (ICIS)--US methanol participants expect a rollover in the December contract because of the huge jump in the November settlement, market observers said on Wednesday.

One participant said it would be wishful thinking to expect a reduction so soon after the 21% increase from the October contract.

"I expect a roll," the participant said, adding that it could be supported as long as spot prices remain at current levels.

The November US methanol contract jumped to 129-133 cents/gal on global supply issues and plant turnarounds in North America.

Rising oil prices also played a part, because methanol historically follows crude values.

On Wednesday, NYMEX front-month WTI crude futures closed at $80.44/bbl, down about 2% from the $81.94/bbl close on 27 October when November methanol contract nominations were announced.

The US methanol spot price, at 116-118 cents/gal, has increased about 5% from 111-112 cents/gal when the November contract was announced.

A seller expected methanol contract prices would remain steady through the end of the year. The seller said there had been no weakening of demand since the price hike.

"There's been no demand destruction so far, despite predictions that these higher prices would do that," the seller said. "But I don't see prices going up, either."

Nominations by suppliers Methanex and Southern Chemical (SCC) historically have set the monthly contract range. Observers said they expect December nominations next week.

($1 = €0.74)

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By: Lane Kelley
+1 713 525 2653

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