No single reason for Europe methanol spot price hike

05 July 2013 23:59  [Source: ICIS news]

LONDON (ICIS)--European methanol spot prices increased by €6.50-14.50/tonne ($8-19/tonne) this week, but there was no single reason behind the jump, sources said on Friday.

Instead, markets participants explained the increase through a combination of ongoing mild tightness, speculative buying and bullish sentiment.

While several sources said Europe is structurally short, and pointed to the buying activities of certain suppliers to cover their contractual obligations as evidence, this is not a new development and there were no new supply interruptions this week.

In addition to suppliers buying, a number of traders were doing likewise and sources suggested they were speculating that the upward trend will continue.

Alternatively, one supplier said it thought many traders had sold material during the latest period of price decreases, through May and early June, and had expected the market to soften more than it had. The supplier said these traders would now be forced to buy back at higher prices to cover themselves.

A number of sources also suggested that the recent political turmoil in Egypt may have created some bullish sentiment, with players concerned about production being affected at the 1.3m tonne/year EMethanex plant, in Damietta. However, operating rates at the plant are understood to be unaffected by recent events.

Another supplier said instead that participants were likely to be preparing for a possible repeat of the Egyptian electricity shortages that occurred in late August 2012, as a result of hot weather, and which resulted in gas supply to EMethanex being cut off and the plant being shut for over a month.

European spot prices this week were assessed at €356-364/tonne FOB (free on board) Rotterdam.

($1 = €0.77)

By: Ross Yeo
+44 208 652 3214

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