ICIS Methanol Methodology Consultations

General Consultation Period: 17/06/13 – 17/07/13

Methanol (GMC06/13)


Background

ICIS is implementing a process of rolling consultation on all of its pricing methodologies. Consultation paper GMC06/13 is part of this formal process and covers all of the ICIS primary price points included in the Methanol weekly publications.

The consultation asked both general questions about the suitability of the ICIS pricing methodology and questions addressing specific methanol market issues.

 

General Methodology Consultation - Summary of responses

Following the recent announcement that ICIS would be launching a formal methodology consultation process, we have received a number of responses from key market players. To read the anonymised public responses please click on the links below.

 

ICIS received in total 12 formal responses and 50 informal responses.

This summary takes into account all responses, both confidential and public. These are the answers pertaining to methodology. Only methodology issues are included in the Summary document.

A clear majority of respondents agreed that the current ICIS methanol methodology provides a reliable measure of market value.

In response to the specific consultation questions about the CFR China and CFR SE Asia assessments in the Asia Pacific and China reports, a majority of responses was in favour of the launch of parallel CFR China price assessments that reflect cargoes from different sources. A minority of responses was not in favour of ICIS publishing new CFR China price assessments defined by supply sources. Regarding the timing of the launch, most responses were for January 2014, with notice given in the fourth quarter of 2013.

A majority of responses agreed that the ICIS CFR SE Asia Main Port assessment should be renamed to CFR SE Asia (Singapore, WC Malaysia, Dumai).

Three respondents were in favour of adding to the Europe report an assessment for a monthly contract price, once the industry agrees to settle one.

A small number of responses wanted clarity on how price assessments are made in an illiquid market, and were not in favour of spot prices being assessed according to market sentiment in the absence of deals.

 

ICIS Initial Decision

The responses do not provide any feedback indicating ICIS should change its current methodology for deals-based reporting of methanol contract or spot markets in any of the geographical regions.

In response to the specific consultation questions about the CFR China and CFR SE Asia assessments in the Asia Pacific and China reports, ICIS intends to make the following changes:

1) Rename the existing CFR China quote to CFR China (All origins) and maintain the assessment methodology of this quote unchanged.

2) Launch two parallel CFR China quotes on 3 January 2014 to reflect cargoes from different plants or load ports. A subscriber note will be published on the weekly Methanol reports from 9th August to 27th December 2013.

The parallel quotes are—

(a) CFR China (Group I) -- reflects cargoes produced in Saudi Arabia, Oman, Qatar, Bahrain, New Zealand, Egypt, Trinidad & Tobago, and Southeast Asia (normalised to a 5.5% import tariff basis)

(b) CFR China (Group 2) -- reflects cargoes produced or loaded from India, Iran, United Arab Emirates, and Middle Eastern origins not reflected in Group 1.

3) Publish the new CFR China quotes in a pilot price table from 9th August 2013 to 27 December 2013.

4) Launch an FOB China assessment on 4th October 2013 to reflect the re-exports from China.

5) Rename the CFR SE Asia Main Port assessment, effective 3 January 2014.

In response to the specific consultation question about the contract price assessment in the Europe report, ICIS intends to add an assessment for a monthly contract price as soon as market participants confirm that one has been established in the European market.

 

To provide further comments or feedback on the ICIS methanol methodology, please contact :

Barbara Ortner: Barbara.Ortner@icis.com

Heng Hui: Hui.Heng@icis.com

Lane Kelley: Lane.Kelley@icis.com

Ross Yeo: Ross.Yeo@icis.com