US July methanol heads 6 cents/gal lower with Methanex posting

27 June 2012 17:24  [Source: ICIS news]

HOUSTON (ICIS)--The US July methanol contract headed lower on Wednesday as Methanex issued its monthly posting at 132 cents/gal (€0.28/litre), a decline of 6 cents/gal from its June number.

Southern Chemical Corp (SCC) has not yet issued its posting for July. In June, SCC posted 133 cents/gal. SCC and Methanex historically have set the range in monthly contracts for US methanol.

Spot prices have moved 6% lower in the past month, currently at 109-110 cents/gal, on expectations of a plant restart in Beaumont, Texas. A month ago, methanol spot barge prices ranged 116-117 cents/gal.

One market source said the 25-cent/gal gap between spot and the June contract numbers would have been hard to maintain from a customer relations standpoint.

“You can’t have that kind of discrepancy for long,” the source said. “Customers wouldn’t put up with it in this market.”

Gaps of 15-20 cents/gal between spot and contract have been common in the past year. The smallest has been an 8 cents/gal spread in late July 2011, with the largest 28 cents/gal in November. Suppliers usually give a discount to contract customers.

Spot prices now are only 1 cent/gal higher than where they were in late June 2011, when the range was 108-109 cents/gal.

Methanol tracks oil over long time periods, and last year at this time prices for West Texas Intermediate (WTI) crude were in the $92-96/bbl range, or at least $12-15/bbl higher.

Crude prices for front-month WTI NYMEX futures ranged $78.68-80.92/bbl.

($1 = €0.80)

By: Lane Kelley
+1 713 525 2653

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