US methanol sources expect another contract rollover in May

25 April 2012 17:21  [Source: ICIS news]

HOUSTON (ICIS)--Market players can expect more of the same with May US methanol contracts, with most sources on Wednesday predicting a rollover in monthly postings.

A rollover in May would repeat monthly postings of 133-134 cents/gal during February, March and April by Methanex and Southern Chemical. The two companies historically have set the monthly contract range.

Sources said that Southern Chemical has notified customers that a rollover is coming, though it could not be confirmed.

“I think it’s going to roll,” a buyer said. “And if it doesn’t, I’m going to have to do a lot of soul-searching.”

However, methanol spot prices have turned up this month, breaking through 115 cents/gal about two weeks ago and hitting 120 cents/gal on Wednesday. Until mid-April, spot prices seemed to be locked in a range of 112-115 cents/gal.

The breakout has narrowed the gap between spot and contract to the smallest difference this year, with a 13.5 cent/gal spread between the two prices now.

US traders and methanol sources have been largely baffled by the spot move up, citing global market conditions. The most popular explanation concerns Western-led trade sanctions on Iran.

“Restrictions on Iran is what I am hearing is driving the spot up,” one source said.

($1 = €0.76)



By: Lane Kelley
+1 713 525 2653



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