Methanol producers confused over Methanex price, target rollover

18 March 2011 17:07  [Source: ICIS news]

LONDON (ICIS)--European methanol producers said on Friday they are confused at Methanex’s decision to post its independent European methanol second quarter contract price at €305/tonne ($430/tonne) FOB (free on board) Rotterdam, a fall of €20/tonne from its first quarter price, and indicated they will instead target a rollover of €315/tonne.

“I don’t understand this number. Fundamentally I think a roll is justified. With our customers we’ve had more or less a consensus for a rollover,” a producer said.

However, buyers were trending more and more towards a decrease, largely as a result of the perception that the possibility of supply interruptions in the Middle East was becoming less likely, and the prospect of demand destruction following the disaster in Japan.

Of those consumers not involved with the Methanex agreement, most were encouraged by the decrease.

“It’s in the right direction, a slight decrease was expected. The contract price should be the same,” said a buyer.

Most players had only had preliminary talks and negotiations are expected to get under way next week.

There are mixed views as to what degree Methanex’s price will influence the rest of the market.

“It certainly has killed the possibility for producers to get an increase,” said one buyer, while another thought it will “definitely” help a decrease emerge.

Producers are generally more dismissive of the impact, although some concede that the chance for an increase is now very slim.

($1 = €0.71)

By: Ross Yeo
+44 208 652 3214

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