Europe methanol buyers prepared to accept €20-30/t contract hike

14 December 2012 16:59  [Source: ICIS news]

LONDON (ICIS)--As negotiations for the quarterly methanol European contract price (ECP) get under way, several buyers on Friday indicated that they are prepared to accept increases of €20-30/tonne ($26-39/tonne).

The buyers said current market conditions – tight availability and high spot prices – mean that such increases would be justified.

“There will be an increase. I think we will end up somewhere between €365-370/tonne,” said one, adding: “Physically it’s tight – that’s widely accepted – and spot prices have been too for the whole quarter.”

The current contract price is €340/tonne.

Perhaps significantly, the scale of these proposed increases is not dissimilar to those put forward by many sellers, and several participants believe this could facilitate a settle taking place next week.

One producer said the minimum increase should be €20-30/tonne, although another said it believed the price would settle higher, at €380-385/tonne.

Participants have an incentive to finalise the first-quarter price next week, before most players leave for Christmas holidays. Thereafter, the market is unlikely to commence regular activity until the second week of January.

The methanol ECP is settled on a free on board (FOB) Rotterdam basis.

($1 = €0.76)

By: Ross Yeo
+44 208 652 3214

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