FocusAsia methanol to extend falls on soft demand until late-October

03 October 2011 06:32 [Source: ICIS news]

In China, methanol demand coming from the traditional applications such as formaldehyde is weak, with activity in the country’s construction sector slowing down as access to credits tighten. By Heng Hui

SINGAPORE (ICIS)--Asia’s methanol prices snapped a five-week-long uptrend as demand softened ahead of a seven-day holiday in the key China market, with the weakness in regional values likely to persist until late October, industry sources said on Monday.

Active spot buying may only resume in time for the expected launch of methanol futures contracts on the Zhengzhou Commodity Exchange in China, market sources said.

Average methanol prices for the week ended 30 September slipped 1.56% to $410/tonne (€303/tonne) CFR (cost and freight) China, after gaining 11.8% over the previous five weeks, according to ICIS data.

This week, China is out of the market as it celebrates its National Day from 1-7 October. Market sources said that trading might still be thin just after China’s holidays as demand traditionally weakens during this time of the year.

Supply of methanol, on the other hand, is just snug with major facilities in the Middle East and southeast Asia either shut or about to be shut for turnaround in October and November.

By late October, however, some market players have expressed optimism that the planned launch of methanol futures contract at the Zhengzhou Commodities Exchange will translate to increased activity in the physical market and buoy up prices.

Other market players doubt the launch of methanol futures could have a lasting positive effect on spot prices, in the absence of strong demand.

In China, methanol demand coming from the traditional applications such as formaldehyde is weak, with activity in the country’s construction sector slowing down as access to credits tighten.

Methanol is used in the manufacture of formaldehyde, methyl tertiary butyl ether (MTBE), methyl chlorides, methyl methacrylate (MMA) and acetic acid.

($1 = €0.75)

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By: Heng Hui
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