10 January 2012 04:10 [Source: ICIS news]
By Heng Hui
Methanol prices are expected to hover in the range of $350-450/tonne (€273-351/tonne) CFR (cost & freight)
Market fluctuations are expected to get wilder because of a possible increase in spot liquidity.
Spot liquidity is expected to increase because of a possible increase of uncontracted cargoes in
Asian buyers said they could not sign contracts with
This will provide another trading platform, and involves lower costs as the minimum volume required to trade is just 50 tonnes.
Worldwide capacity expansions are expected to be little, with one or two new plants coming on stream, which will be unable to keep up with the growth in demand.
Methanex is expected to restart its idled 850,000 tonne/year plant in
This will be barely enough to cope with the increased demand, which is estimated to grow by 3m-4m tonnes to around 30 m tonnes in 2012 in
Meanwhile, there may be a rebalancing of trade flows between Europe and the
Demand requirements from
With strong economic growth of
Steady demand growth from non-traditional applications in
The two sectors – dimethyl ether (DME) and methanol-gasoline – account for more than a third of Chinese methanol demand and are poised to achieve phenomenal growth this year, according to buyers and sellers.
The methyl tertiary butyl ether (MTBE) segment should continue to be supported by demand from the domestic downstream chemical industry and the greater use of higher-octane gasoline.
Up and coming methanol-to-olefins (MTO) technology in the key
Although the Chinese economy will be affected by the downturn in Europe and the
Average operating rates of Chinese methanol units were at less than 50% in 2011 because of high cost of production, industry sources said.
Current supply sources will continue to be concentrated in the Middle East and South America, but new sources are developing and the majority of methanol production will be located close to where the resources are, for example in the US.
However, growth could be short-lived if global macroeconomic conditions do not improve.
The growth in the rest of the applications, formaldehyde, acetic acid, dimethyl formamide (DMF), polyoxymethane, are heavily linked to GDP – which is likely to slow this year because of economic worries in the global markets.
"Buyers are extremely cautious and are buying on need-to-buy basis only," an Indian trader said.
"Overall demand from the formaldehyde derivative sectors remains weak, a reflection of weak export markets and also sluggish domestic real estate market,” the trader added.
Port inventories in
Methanol is usually traded in China at a range of yuan (CNY) 2,800-3,200/tonne ($444-507/tonne) ex-tank, with the bottom end representing the highest manufacturing costs of methanol producers and the top end representing the prices acceptable by dimethyl ether (DME) energy blenders, assuming stable DME blending economics and demand.
($1 = €0.78, $1 = CNY6.31)
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