06 September 2013 13:48 [Source: ICIS news]
By Julia Meehan
LONDON (ICIS)--European methanol spot prices remain at five-year highs, supported by good demand and low stock levels, sources said on Friday.
“A couple of September deals were done at €370/tonne and some stuff under the radar earlier in the week. Euro methanol is purely supply and demand driven and there are always production issues,” said a broker source.
The broker quoted €370-374/tonne ($487-492/tonne) FOB (free on board) Rdam (Rotterdam) as representative of business done, adding that Q4 contract price “ideas” were around €400-410/tonne FOB Rdam.
A second broker saw September and October spot methanol prices in a similar range, quoting €374.50/tonne as the October high.
“€370-€374.50/tonne for October [traded]. September traded a couple of times - around 6,000- 7,000 tonnes. There is some pressure. Supply is a problem and I am also surprised to see spot strong,” the broker source said.
The broker added that producers were running at full capacity and described its demand as “strong”.
Meanwhile, a methanol buyer attributed the current strength of methanol to GDP (gross domestic product) and higher methanol prices in the US and Asia.
“We see increases in Asia and the US and spot has been very high in the last months. Demand is pretty stable, but it’s gradually increasing along with GDP globally - since GDP is correlated close to the building and car industries,” the buyer said.
The month of August closed with spot methanol prices hitting their highest levels since January 2008 at a weekly range of €367-373/tonne.
There was no clear reason for the increase, with many participants suspecting a production problem but nothing of this nature was substantiated.
Meanwhile, biodiesel production economics have been healthy throughout the summer, along with those for other energy applications, such as methyl tertiary butyl ether (MTBE).
Methanol demand was also stronger than expected in the third quarter, sources said.
Because the market is expected to remain stable moving into the fourth quarter, buyers and sellers do not expect to see any significant shifts in the value of spot methanol. Indeed, most say that prices will remain at these high levels possibly until the end of the year.
($1 = €0.76)
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