Europe methanol producers aiming for significant increase in Q1

26 November 2010 16:49  [Source: ICIS news]

LONDON (ICIS)--The European methanol contract price should increase significantly in the first quarter of 2011 reflecting high global spot prices, producers said on Friday.

Spot prices in the US, Asia and Europe are all higher than the current European contract price of €277/tonne ($369/tonne) FOB (free on board) Rotterdam, which producers said was an indication of the strength of the global market and justification for a substantial increase.

“For four quarters in a row the contract has been too low…it would be strange to discuss a rollover at $277/tonne, that makes no sense at all,” said one major producer.

Although it was too early to suggest any numbers, all producers were in agreement that the increase should be more than just a token gesture.

“The increase should be substantial but reasonable, it should not be cosmetic,” a second key producer said.

Buyers were more varied in their projections, with some willing to accept a certain degree of increase while others thought a rollover was more justified.

Although they conceded that current conditions warranted a slight increase, they pointed to the softer Chinese market, which saw prices fall from $400-415/tonne to $370-380/tonne CFR (cost and freight) China over that past two weeks, as a sign that the global market was weakening.

“I think there’s a good chance that Chinese prices will continue to go down, in which case a rollover would be appropriate,” a large buyer said. The Chinese spot market is widely considered to be the most accurate measure of global trends due its high liquidity.

Consumers and producers agreed that the European contract price will depend heavily on what happens in the Chinese market and that it was too early to make predictions with any real confidence.

($1 = €.75)

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By: Ross Yeo
+44 208 652 3214

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