16 August 2013 23:59 [Source: ICIS news]
LONDON (ICIS)--The European methanol spot market softened in the week ending 16 August by €3-8/tonne amid a pick up in trading, ICIS data showed on Monday.
However, the reasons for the decrease were not clear.
Some participants felt that concerns over supply, which were believed to have pushed prices up in July, have eased.
These concerns focus primarily on production in Trinidad and Egypt, with the former scheduled to have a gas curtailment in September and the latter seeing devastating political unrest that some fear could affect methanol production there.
However, inventories in the US were heard to be at fairly high levels, which could reduce that market’s reliance on Trinidadian imports and therefore leave more material available for export to Europe.
Secondly, despite the turmoil in Egypt, the 1.3m tonne/year EMethanex plant is understood to still be running - albeit at the same reduced rates that have been in effect since the fourth quarter of 2012.
“As long as Egypt is running and Trinidad is shipping, we won’t have any supply problems [in September],” said a consumer.
The consumer also said it had heard rumours that additional vessels were being shipped to Europe from the Middle East, on top of the usual contracted supplies, to take advantage of higher prices in Europe compared with Asia Pacific, and that September supplies were sufficient as a result.
However, other sources believe the concerns over supply are still very much in place, and that, as a result, the market is unlikely to fall much further, and could increase again in the coming weeks.
One trader suggested many suppliers with deficits had secured these volumes in July before departing for holidays in August, and that this glut of buying activity was responsible for the price increases at that time. This week’s decreases were seen as a correction down to levels corresponding with suppliers’ current covering needs.
A producer thought it possible that some sellers had lowered offers for August in order to shift material before the end of the month, and that the subsequently lower August prices had pulled September down also.
Prices for the week ending 16 August were assessed at €357-262/tonne ($476-483/tonne) FOB (free on board) Rotterdam.
($1 = €0.75)
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