Methanol sources expect delayed reaction Texas plant FM

14 February 2011 19:27  [Source: ICIS news]

HOUSTON (ICIS)--A force majeure (FM) declared last week at LyondellBasell subsidiary Millennium Petrochemicals' Texas methanol unit would provoke, at best, a delayed US spot market reaction, according to market sources on Monday.

US spot barge methanol prices have shown sensitivity to plant outages in the Caribbean and South America in recent months, with prices often bobbing up on turnarounds and unplanned stoppages.

But methanol prices went down 5 cents/gal last week when LyondellBasell declared FM at its 600,000 tonne/year plant in La Porte, a suburb of Houston.

US spot barge prices closed the week at 102-104 cents/gal, compared with the previous weekly close of 107-109 cents/gal.

On Monday, sources said the low end of the range had inched up to 103-104 cents/gal.

LyondellBasell spokesman David Harpole would not comment when asked about the Millennium outage on Monday.

Since much of the methanol produced at the plant is used by Millennium, it should have less impact on spot prices than outages at other plants would, according to sources.

For example, US methanol spot prices skyrocketed last year when the  1.7m tonne/year Atlas Methanol plant in Trinidad went down in early May, with the outage extending well into June. One source said the Millennium outage might have some impact in the last week or two of February when contract nominations usually appear.

“So you might not see fall-out from this until next week when a small perfect storm comes together,” the source said.

One source estimated that roughly one-half of the Millennium plant’s methanol is used for its own consumption, producing downstream products acetic acid and vinyl acetate monomer (VAM).

The other half of the plant’s methanol production is sold in the merchant market, the source said.

Another third source said the company had put methanol customers on 40% allocation until further notice.

($1 = €0.74)

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By: Lane Kelley
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