17 June 2011 11:26 [Source: ICIS news]
LONDON (ICIS)--An initial third quarter European methanol contract has been agreed down by €10/tonne at €295/tonne ($415/tonne), the buyer and seller involved in the settlement said on Friday.
Another buyer and seller have agreed to follow the price and indicated that several other players were also willing to do so, confirmation of which is pending.
The settlement, on a free on board (FOB) Rotterdam basis, was made almost at the same time as producer Methanex announced it would post its independent European Posted Contract Price also at €295/tonne, having agreed with five buyers.
“With the number of people on board, it looks like a done deal,” said a producer. “It might be, from our point of view, a little on the low side, but really it represents fairly stable pricing with just a slight decrease.”
This sentiment was confirmed by the buyers, with one saying: “It’s probably closer to our side than the seller-side – of course that’s a good development. Last time it was closer to their side…this is a good and reasonable settlement.”
The reasons given for the decrease were generally a mixture of spot pricing, the euro/dollar exchange rate and anticipated supply/demand dynamics in the third quarter.
Spot prices have been on average lower than in the second quarter; most buyers see the euro strengthening once the Greek bailout is finalised and the summer months often see slightly sluggish demand when compared with the rest of the year.
Nevertheless, at least one producer was adamant that a rollover had been justified.
"I don’t think there should have been a change [in the contract price]. There could be a slight summer slow-down, but I don’t really buy that. This is more or less a favour from the sellers to the buyers.”
($1 = €0.71)
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