Europe methanol Q4 discussions yet to commence

06 September 2013 16:11  [Source: ICIS news]

LONDON (ICIS)--European methanol fourth quarter contract price discussions have yet to get under way between major players, although some price ideas have been mentioned in the market, sources said on Friday.

In relation to fourth quarter contracts, a major producer said: “It’s too soon to say. We just had our initial internal meeting – overall demand is doing quite well – Q3 was much better than expected.

“Supply is a bit of challenge.”

The producer also referred to seasonal turnarounds in Russia compounding the lack of availability moving from the third to fourth quarter.

A second producer said: “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 third quarter methanol contract price settled at €390/tonne ($513/tonne), which was a rollover from the second quarter.

On the buying side, a contract customer said it “saw no place” for an increase.

“The US rolled over. In the end it’s the [global economic] recovery that will make the difference” it added.

A second buyer said: “Will it [the contract price] go up? It’s difficult to know. €390/tonne rollover maybe is difficult. The [spot] market is zigzagging actually. There is no Iran anymore and Egypt is on and off.”

A third major buyer also said it was too early to talk about fourth quarter contracts.

“For Q4 it’s too early. The major participants have not yet started talking. Demand is Europe is pretty stable and offtake is solid. There is lots of speculation because one producer in the north had problems.

“Egypt – this keeps spot prices firming – we have additional gas curtailments in Trinidad but it’s not as bad.”

For the fourth quarter methanol contracts, a broker said €400-410/tonne was more about “ideas” than “talk”.

Meanwhile, methanol spot prices remain at five-year highs, supported by good demand and low stock levels.

September traded early in the week at a low of €367.50/tonne FOB Rdam, while October traded at a high of €374.50/tonne.

($1 = €0.76)

By: Julia Meehan
+44 20 8652 3214

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