Methanex nomination points to rollover for US July methanol

27 June 2011 17:54  [Source: ICIS news]

HOUSTON (ICIS)--The US July methanol contract headed for a rollover on Monday for the sixth consecutive month in a row as Methanex nominated 128 cents/gal (€0.24/litre).

Most methanol sources expect a rollover, mainly because of the rollover trend this year. The monthly methanol contract moved down to 126-128 cents/gal in February and has remained at that level. “I am expecting a roll for July,” a large buyer said on Monday.

The buyer also said that the spot methanol price remains at 108-109 cents/gal. Some methanol sources say that the contract is overpriced based on crude values, which have dropped by 10% in the past month.

A popular formula for estimating the methanol spot price based on oil pegs the spot price of methanol at 99 cents/gal, or almost 10 cents/gal lower than it is now.

On Monday, one buyer predicted that oil prices would have to drop to the low $80/bbl range before there might be any chance of Methanex or Southern Chemical (SCC) lowering the monthly contract.

Even then it might not happen, the buyer also said, noting a month-long outage coming in September at Methanex’s 1.7m tonne/year Atlas plant in Trinidad. “I think they will hold on to pricing,” they said. “Look at the fall event coming.”

Historically, methanol prices have tracked crude values over the long-term. When the methanol contract last changed, dropping by 5 cents/gal in February, oil prices were around $85.65/bbl.

In mid-morning trading on Monday, NYMEX front-month crude futures reached $90.80 bbl, about 6% higher than in February.

Methanex and SCC typically have set the monthly North American contract methanol range with their nominations. SCC has not issued its nomination yet.

($1 = €0.71)

For more on methanol, visit ICIS chemical intelligence

By: Lane Kelley
+1 713 525 2653

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