EPCA ’12: Plant outages prevent length in Europe methanol market

07 October 2012 11:44  [Source: ICIS news]

BUDAPEST (ICIS)--The European methanol market would be suffering from an oversupply if not for various production limitations that have acted to balance sluggish demand, buyers said on Sunday.

Speaking at the sidelines of the 46th annual European Petrochemical Association (EPCA) meeting in Budapest, Hungary, methanol buyers pointed to various supply problems in 2012 that normally would have been expected to tighten the market and boost prices.

It is their opinion that the reduced methanol supply is actually fairly well balanced to demand, which, for many participants, has remained at disappointing levels for much of the past two years.

“We’re flat at the bottom, we can’t go further down,” said a buyer whose primary downstream outlet is the construction industry. “Construction is very closely linked to GDP, so it will pick up when the economy does.”

One of the longer term production outages is Libya’s National Oil Corporation’s two lines in Marsa El-Brega, totalling 660,000 tonnes/year.

The plants were shut down in February 2011 at the onset of the Libyan civil war, but there is talk in the market that production could resume this month.

Since January this year, supply from Iran has ceased arriving in Europe following broadened trade sanctions announced by the EU in response to Tehran’s nuclear programme. Previously around 500,000 tonnes of Iranian methanol found its way to Europe annually.

In late August this year, Canadian producer Methanex’s 1.3m tonne/year plant in Damietta, Egypt, was shut after it gas supply was cut off by the government because of electricity shortages.

The company announced that the plant was restarted in late September, but other European suppliers are doubtful it is running at high rates.

Although this latest outage did produce a price reaction in the spot market, buyers said it was surprising it was not more pronounced, given the pre-existing supply problems.   

It remains to be seen what prices levels will emerge if and when all plants operate at the same time.

The annual EPCA meeting runs from 6-10 October.

By: Ross Yeo
+44 208 652 3214

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