02 May 2013 20:10 [Source: ICIS news]
HOUSTON (ICIS)--The discount between China and US spot methanol prices reached a five-year high recently and more than likely explains two ships loading on the Yangtze River this week for voyages to Houston, sources said on Thursday.
The Intrepid Seahawk and Maritime Gisela, both loading in early May, will bring 24,000 tonnes of methanol to the US, according to information from brokers.
For a seller, the arbitrage between the two countries currently favours the US spot barge price of 146 cents/gal, which converts to $487/tonne (€370/tonne).
Spot prices in China run nearly $130/tonne less, with the CFR China spot price now ranging $352-365/tonne, according to ICIS.
It marks the largest gap between the two countries’ prices since late 2007, according to an ICIS analysis.
A methanol source said that, even with a freight rate of $80/tonne - as on the Intrepid Seahawk cargo - that there would probably be a profit of more than $20/tonne on the shipment.
“Most of the stuff coming over is because of the pricing,” the source said.
China traders say sellers prefer sending material to the US and also to Europe, where spot methanol currently sells around $507/tonne when converting from the euro.
There are at least half a dozen announced projects to build more methanol plants in the US over the next few years, but the nation presently has to import most of its 5.5m tonnes of annual methanol demand.
Trinidad and Tobago has supplied roughly 70% of US imports for much of the past decade. The tiny Caribbean country off the coast of Venezuela exported 292,994 tonnes to the US in February, more than 12 times a much as the recent China shipments.
($1 = €0.76)
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