Europe methanol stock rebuild will take time – producer

25 January 2013 15:13  [Source: ICIS news]

LONDON (ICIS)--The European methanol market will take longer to recover from the severe tightness that developed at the end of 2012 than many participants had expected, a producer said on Friday.

The majority of the fourth quarter of last year was characterised by tight supply, brought about by a range of production problems, and consequently high prices.

While not all of these production problems have been resolved, supply in the first quarter was expected to be more reliable; something which has largely proved to be the case. As a result of this improved supply, several players had expected supplies in the market to have normalised by the end of January.

Yet the producer warned that this is unlikely to happen so quickly.

“I think the rebuild will take longer than expected. People were talking about prices coming down quickly in January, but we don’t see that happening,” the producer said.

This week, spot prices firmed moderately amid what many sources have described as bullish sentiment and speculation, rather than any significant interruption to European supply (perhaps barring a delay to a vessel arriving in northwest Europe early in the week).

News of reduced production in Iran and Asia Pacific may have had a more pronounced firming effect than would normally be expected because European inventories remain lower than usual.

The producer declined to suggest a timeline for the full normalisation of European inventories, saying it would depend on how the rest of the current quarter developed, in terms of production.

Consumer demand, by most accounts, is stable.

By: Ross Yeo
+44 208 652 3214

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