Methanol sources expect a big increase in US May contract

24 April 2013 20:14  [Source: ICIS news]

Methanol sources expect a big increase in US May contractHOUSTON (ICIS)--US May methanol contracts will likely incresae by double digits, sources said on Wednesday.

Even the lowest estimates see prices shooting up to 165 cents/gal  10 cents/gal above the highest April posting  based on last week’s big jump in spot prices because of new natural gas curtailments in Trinidad.

Higher estimates projected the top end would reach 168-170 cents/gal.

“It doesn’t seem too promising,” said a buyer who has begun negotiations with a supplier for May.

The buyer said his usual resistance to higher prices is not working and that he expects a hike of 10-15 cents/gal over the April average of 154 cents/gal.

“The market is tight and the situation in Trinidad is not helping,” the buyer said.

The latest round of natural gas cutbacks to methanol producers in Trinidad prompted spot prices to soar as high as 147 cents/gal last week, up from the previous spot average price of 138 cents/gal.

US methanol spot prices on Wednesday remained at 146-147 cents/gal. “So that justifies the jump” in contract prices, a seller said.

Besides boosting spot prices, the Trinidad curtailment also put at least one US methanol consumer  Mitsui in enough of a bind to order 4,000 tonnes of methanol from China for early May delivery on the Maritime Gisela.

Another buyer said an increase of 10-12 cents/gal seemed inevitable  and potentially disastrous.

“It’s going to kill demand,” the buyer said, adding that it would be particularly onerous for formaldehyde and resin producers. “They can’t pass those kinds of cost increases along to their customers.”

Methanex and Southern Chemical Corp (SCC) typically set the US contract range with their postings. Neither company has issued its May number yet.

By: Lane Kelley
+1 713 525 2653

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