Europe methanol spot trading low in absence of clear market direction

18 January 2013 16:21  [Source: ICIS news]

LONDON (ICIS)--The European methanol spot market has seen extremely low levels of trading this week because players are waiting for others to make a move and give the market some direction, sources said on Friday.

Just one deal has been reported this week, and even private trading taking place under the radar is believed to have been minimal.

“Obviously never 100% sure [about private business] but it looks very much dead out there this week,” said a broker.

Bids and offers have been hovering around the €315-320/tonne ($420-427/tonne) FOB (free on board) Rotterdam level for the past two weeks, with both sides seemingly reluctant to concede ground.

Sources are generally quite surprised at the illiquidity, having expected a return to action after the holiday period to take place sooner than this.

By most accounts the tightness seen in the fourth quarter of 2012 has eased, meaning there is less urgency to secure material via the spot market. At the same time, inventories are believed to still be at fairly low levels, and so there is little incentive for players to offer volumes.

Furthermore, being near the start of the quarter, and indeed the year, means players have more flexibility with respect to their supplies, and so there is less need to dip into the spot market, sources said.

The absence of any clear market direction has also been attributed to the lack of events impacting market fundamentals.

“The river [Rhine] is at normal levels, there are no shipment delays, everything is quite normal,” said a producer.

($1 = €0.75)

By: Ross Yeo
+44 208 652 3214

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