Europe methanol players surprised by latest price hikes

19 October 2012 14:47  [Source: ICIS news]

LONDON (ICIS)--European methanol spot prices have surged by €15-25/tonne ($19-32/tonne) FOB (free on board) Rotterdam this week, yet at present there are no clear explanations for such a pronounced rise, market players said on Friday.

Spot availability is tight and prices have been increasing more or less steadily since mid-August, albeit at modest rates.

These moderate increases are explained by tight spot availability and several suppliers needing to cover contractual obligations with prompt purchases. The ultimate causes of which are various production outages that have taken place in recent months.

However, such conditions do not fully explain this week’s price hikes and many sources have been left baffled. Furthermore, deals for December loading have take place at the same high prices as November, suggesting players fear the tightness may extend beyond the short term.

“I really have no idea, it’s quite confusing,” said a large buyer, whose opinion was widely echoed in the market.

Another buyer/trader suggested the explanation may be that most of the major European suppliers are currently experiencing mild to moderate supply interruptions, which, when combined, constitute a major shortage in the European supply chain.

Methanex closed its 1.3m tonne/year plant in Damietta, Egypt, from late August to late September, yet there remain doubts in the market as to whether it is running at high rates.

There are natural gas curtailments taking place in Trinidad that have resulted in various plant turnarounds being brought forward to coincide with the reduced feedstock supply. Methanol Holdings (Trinidad) Limited (MHTL) recently restarted its 1.9m tonne/year M5000 plant and its 580,000 tonne/year M4 plant, while Methanex is currently undergoing a turnaround at its 1.7m tonne/year Atlas plant.

Vitol has suffered a shortage because of an eight to nine day delay on a shipment arriving in Europe from the Middle East.

Statoil was forced to shut its 900,000 tonne/year plant in Tjeldbergodden, Norway, for over two weeks in June/July and is believed to still have a material shortfall as a consequence of this.

Both the 450,000 tonne/year and 550,000 tonne/year plants owned by Togliatti Azot in Togliatti, Russia are offline while Tomskneftekhim’s 825,000 tonne/year plant in Tomsk, Russia was recently restarted after a turnaround.

Nevertheless, most of these supply issues are not new and many sources are suspicious that a new outage has occurred without their knowledge.

In light of the Trinidadian output reduction and the fact that the island accounted for 69% of US imports in 2011, prices in the US have also jumped, by 11% for the week up to Thursday.

Yet while US and European prices go through the roof, Asian prices have held relatively stable. Given the huge influence Asian markets wield on a global level, the buyer above believes that as long as Asia remain steady, the European and US increases will not be sustainable.

($1 = €0.77)


By: Ross Yeo
+44 208 652 3214



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