05 July 2012 21:39 [Source: ICIS news]
HOUSTON (ICIS)--A Texas methanol plant that has been mothballed for seven years began production on 4 July, the plant’s owner said on Thursday.
Frank Bakker, manager of the plant owned by OCI Beaumont, a division of Orascom Construction Industries (OCI), said in a statement that the 750,000 tonne/year plant began methanol production on Wednesday.
Sources close to the unit said it was scheduled to start operating in June, but various issues delayed full-out production.
Bakker’s statement said one problem encountered in the restart involved refurbishing the methanol plant while the 250,000 tonne/year ammonia unit was running. The ammonia plant began production in December.
“The project was a challenge as there was a lot of discovery work and we had to switch main contractors in the middle of the project,” Bakker said.
It took a little over a year to get the plant inspected, refurbished and running, Bakker said.
The restart, said to cost around $65m (€52m), originally was steered by former Methanex executive Deo Van Wijk, a methanol operator who lined up the deal to buy the plant from Eastman Chemical in early 2011. But by May 2011, Van Wijk had sold his interest, leaving OCI the 100% owner of the plant.
The Beaumont restart has definitely been a factor in lowering methanol spot barge prices during the past month, according to industry sources.
A methanol source said buying continued as long as the plant’s restart kept getting moved back, but the buying stopped when it seemed likely that production would begin toward the end of June.
In early June, prices hovered near 116 cents/gal and began dropping as the plant’s restart date moved closer. On Thursday, prices ranged from 108-109 cents/gal, right at the 52-week low of 108.5 cents/gal, reached in June of 2011.
A trader on Thursday said there were bids at 105 cents/gal but no deals done yet at that price.
“If you can short a barge or two now, it’s a no-brainer,” the trader said. “In the short-term, prices are definitely going down.”
($1 = €0.80)
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