US spot barge methanol prices drop 4% on sinking demand

02 November 2011 21:28  [Source: ICIS news]

HOUSTON (ICIS)--US spot methanol dropped by 4% this week on sinking demand, market sources said on Wednesday.

“I believe demand is getting thinner,” a buyer said, explaining why spot prices had dropped to $1.085-1.09/gal from $1.135-1.145/gal on 28 October.

Demand throughout the US economy also appeared to be thinning, as the Federal Reserve this week lowered growth forecasts and raised unemployment projections, suggesting the economy has a longer path to recovery.

Some methanol sources said they were confused by the spot drop, considering that crude prices have risen by 20% in the past month and methanol production remains curtailed in Trinidad, where 70% of US methanol imports are produced. Contract prices also rolled over in November, at $1.35-1.38/gal, a repeat of the October postings.

Another source cited weak spot markets in Europe and Asia as well as the US as proof that global methanol production is outpacing demand.

The source said there is no shortage of methanol in any global region, and spot prices in each one have failed to cross the contract price at any time this year.

Another methanol source suggested a seasonal reason for the drop in spot prices. Most downstream production dependent on methanol - at paper mills and formaldehyde manufacturers, for example - usually tails off around this time, the source said.

“Production is ramping down in a lot of things right now,” the source said.

In the same period last year, US spot barge methanol prices slipped a little, from $1.14-1.15/gal in the last week of October, to $1.11-1.15/gal in the first few days of November.

But spot methanol prices ended November 2010 higher, averaging $1.17/gal.

($1 = €0.73)

For more on methanol, visit ICIS Chemical Intelligence

By: Lane Kelley
+1 713 525 2653

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