27 March 2013 04:56 [Source: ICIS news]
By Heng Hui
SINGAPORE (ICIS)--Methanol prices in India’s west coast will be mainly driven by Iranian supply of the material after spiking this week on the back of low inventory levels, local market players said on Wednesday.
Prices of methanol cargoes in Kandla rose by Indian rupees (Rs) 4/kg, or by 18%, earlier this week from the previous week because of the huge spikes in offers due to a dip in supply from Iran, they said.
Prices were last assessed on Tuesday at Rs25-26/kg (Rs25,000-26,000/tonne) ($459-478/tonne) ex-tank in Kandla.
Deals were concluded at Rs25.50/kg ex-tank, while fresh offers were heard at Rs26.00/kg ex-tank, according to distributors and local buyers.
Supply of methanol from Iran has been cut because of the Iranian New Year holiday which runs from 21 March to 5 April, market players said.
The west coast Indian market is heavily reliant on Iranian imports, which constitutes about 70% of total spot imports. Methanol imports make up almost 90% of the west coast supply, according to ICIS.
Indian methanol markets are expected to maintain stable-to-firm performance until June, when the monsoon season begins and downstream formaldehyde makers lower their plant operating rates.
Looking ahead, the future of methanol pricing in India will increasingly be dominated by the regularity of supply from Iran, market participants said.
“India and Iran have a love hate relationship. We are dependent on each other. If supplies come, prices go down, but if supplies don’t come, prices go up,” an importer said.
The turnaround and netbacks for the Indian market for Iran suppliers are a lot higher than China, said India-based market participants.
According to Indian shipbrokers, the freight rate from India to Iran is at $58-60/tonne and the turnaround time for a shipment from Iran to India is faster than that of Iran to China.
While the freight rate from Iran to China was heard to be slightly less than $100/tonne, the time taken to sail to China and back to load in the Arabian Gulf is twice or three times as long, making the Iran-India route extremely lucrative.
Iran producers were not available for comments due to the holidays although an Iranian seller had previously mentioned India will continue to be an important methanol market for Tehran.
($1 = Rs54.44)
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