Methanex proposes lower Jan methanol price on sinking US spot values

20 December 2010 17:16  [Source: ICIS news]

A methanex plant in TrinidadHOUSTON (ICIS)--Methanex reduced its January contract methanol nomination by 3 cents/gal on Monday following a big drop in the spot market late last week.

Methanex's drop to 135 cents/gal made some decrease in the monthly contract range likely.

The move still left Southern Chemical (SCC) to post its nomination, which was 129 cents/gal for the December contract. Both companies historically have set the monthly North American contract methanol range with their nominations.

Market sources said the drop in spot prices last week made an increase in the January contract unlikely. One buyer speculated that Methanex came out early with its contract nomination as a defensive measure because of the lower spot values.

A large buyer reported talk that SCC would either roll its December price or nominate a slight reduction.

US methanol barge prices plunged on Friday, with a reported trade late in the day for 10,000/bbl loading in mid-December at 105 cents/gal FOB (free on board) Houston. That was a sizable drop from the previous low of 109 cents/gal and just a penny off the fourth quarter spot low of 104 cents/gal set in mid-October.

A buyer said there had been talk earlier last week of a major purchase - 40,000/bbl - made at 109 cents/gal.

US methanol spot prices have dropped 13% since peaking at 120 cents/gal in mid-November. Some observers found the contract runup in the fourth quarter baffling, considering there were no existing supply issues in North America.

Methanex chairman Bruce Aitken in late October attributed the rising methanol prices to low production levels in China.

($1 = €0.76)

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By: Lane Kelley
+1 713 525 2653



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