Methanex to remain net methanol buyer despite Egypt production

01 April 2011 13:13  [Source: ICIS news]

(In third paragraph, adds that the plant is expected to restart this month.)

A methanol plant in TrinidadLONDON (ICIS)--Methanol producer Methanex is to continue its policy of marketing more methanol than it produces even after the successful start-up of its long-overdue 1.3m tonne/year plant at Damietta, Egypt, a source with the company said on Friday.

The plant in Egypt began to produce on-spec material last week, having been originally planned to start commercial production in early 2010.

Methanex also expects to restart this month its 470,000 tonne/year plant at Medicine Hat, in Canada's Alberta province, after a hiatus of more than 9 years following its shutdown in 2001 due to unfavourable feedstock gas prices.

The company has a policy of selling more product than it produces, making up the difference with purchases from the global spot markets.

“We will still be a net buyer, that’s our strategy. We want to stay in touch with the spot market,” the source said.

Supplementing its own supplies with purchases from the spot market also serves to form a useful buffer against problems with fluctuations in demand or supply, the source explained, with the company easily able to adjust the volumes it purchases.

The source did acknowledge, though, that the new production additions would result in a decrease in the spot volumes Methanex purchases, which have been higher than usual of late because of the delayed start-up of the plant in Egypt.

“The amount of the last two years has been high, because we pre-marketed supplies from Egypt, so that will reduce a bit,” the source said.

Buyers in Europe often cited the addition of the Egypt plant, and the consequent reduction in Methanex’s spot buying activity, as a reason to decrease the quarterly contract price, which settled on 31 March at €305/tonne ($436/tonne) FOB (free on board) Rotterdam, down €10/tonne from the previous quarter.

However, a trader said it does not expect to see a significant lengthening of the market. “I don’t see a massive impact. Libya counters Egypt to some extent. Also, I think [Methanex is] still quite short globally, so they’ll still be buying spot.”

Libya’s 600,000 tonnes/year of methanol production at Marsa El Brega has been off line since 21 February after violence broke out in the country.

($1 = €0.70)

For more on methanol visit ICIS chemical intelligence

By: Ross Yeo
+44 208 652 3214

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