Methanol Methodology

Methanol is primarily used to produce formaldehyde, methyl tertiary butyl ether (MTBE) and acetic acid, with smaller amounts going into the manufacture of DMT, MMA, chloromethanes, methylamines, glycol methyl ethers and fuels. It also has many general solvent and antifreeze uses, such as being a component for paint strippers, car windshield washer compounds and a deicer for natural gas pipelines.

ICIS pricing quotes methanol in Europe, Asia-Pacific, China and the US Gulf.

Frequency

· Published weekly on Fridays and daily – the Methanol Daily (Asia) – from Monday-Friday.

· Published daily within “Gasoline/Naphtha/MTBE (US Gulf)” report. See separate entry for details

· Real time Price Alert Service (PAS) delivering market news and trends throughout the day.

Methanol (EUROPE)

Weekly Price Assessments:

Methanol Quarterly Contract Prices

• FOB RDAM (EUR/MT & conversion to US CTS/GAL)

Methanol Spot Prices

• FOB RDAM T2 (EUR/MT & conversion to US CTS/GAL)

Methanol (ASIA-PACIFIC)

Weekly Price Assessments:

Methanol Spot Prices

• CFR KOREA (USD/MT & conversion to US CTS/GAL)
• CFR TAIWAN (USD/MT & conversion to US CTS/GAL)
• CFR S.E. ASIA Major Ports (USD/MT & conversion to US CTS/GAL)
• CFR W.C.INDIA (USD/MT & conversion to US CTS/GAL)
• CFR CHINA (USD/MT & conversion to US CTS/GAL)
• EX-TANK CHINA (CNY/MT & conversion to US CTS/GAL)

Daily Price Assessments:

Methanol Spot Prices

• CFR CHINA (USD/MT & conversion to US CTS/GAL)
• EX-TANK EAST CHINA (CNY/MT & conversion to US CTS/GAL)
• EX-TANK SOUTH CHINA (CNY/MT & conversion to US CTS/GAL)
• EX-TANK INDIA (KANDLA) (RS/KG & conversion to US CTS/GAL)
• CFR S.E. ASIA Major Ports (USD/MT & conversion to US CTS/GAL)

Methanol (CHINA)

Weekly Price Assessments:

Methanol Spot Prices

• CFR CHINA (USD/MT)
• East China (ex-tank) (CNY/MT )
• South China (ex-tank) (CNY/MT)
• Inland China ( ex-works) (CNY/MT)

Methanol (US GULF)

Weekly Price Assessments:

Methanol Monthly Contract Prices

• FOB BARGE (US CTS/LB & conversion to USD/MT)

Methanol Spot Prices

• FOB DOM BARGE(+) (US CTS/GAL & conversion to USD/MT)

NOTE: (+) price range for the week

• FOB DOM BARGE (*)(US CTS/GAL & conversion to USD/MT)

NOTE: (*) price spread at close of business on Friday

General Information:

Assessment window: Price assessments are based on information supplied by market participants through the week up to close of business on Fridays at 1800 hours in London and Houston.

Asia daily and weekly assessments are based on information gathered throughout the day up to the close of business at 1730 hours in Singapore/Shanghai.

Specifications: ICIS pricing quotes product except in China that is IMPCA or ASTM D1152-89 standards approved. This is based on 99.85% minimum purity and a water content of 0.1%. Acidity is limited to 30 mg/kg. Pricing quotes in the domestic Chinese market are up to GB338-92 standards.

Timing: Cargoes loading or delivered in Europe four weeks forward from the date of publication, and two-six weeks forward in Asia. US spot barge quotes are for loading with three weeks of publication date.

Terms: 30-60 days after bill of lading date for regions outside of China. 30- 90 days for China. A standard normalization process for cargoes which fall outside this basis will continue, using interest rates widely used by market participants.

Standard cargo size: A typical spot cargo size into Rotterdam is between 1,000-3,000 tonnes. In Asia, typical trades for assessment vary depending on country. Please see below for details. US price quotes typically reflect deals done for volumes of at least 10,000 barrels.

Assessment basis: Methanol price assessments are based on reported business and bids-offers heard throughout the week.

In Europe, the quarterly contract number is included in the published price range once the major players in market settle a contract price and it is fully established in the market. The contract price is T2 product. The spot price range includes FOB Rdam transactions reported as physical deals loading up to four weeks from when the deal was done and concluded between buyers and sellers during the previous week. Certain prices may be excluded from the range if they have been negotiated in unusual circumstances or if special conditions are thought to apply. In the absence of business, the price spread can also move based on prevailing market sentiment, and CIF deals may also be used in the FOB range at editorial discretion.

In Asia, spot price assessments are based on information gathered throughout the week (Monday to Friday) from market players comprising producers, end-users and traders. The process of evaluation firstly takes into consideration confirmed deals, then reported deals. Best bids and offers and unconfirmed market talk may also be partly taken into consideration in the formulation of assessments in the absence of, or in conjunction with, confirmed deals, especially if they are in line with rapidly changing market fundamentals.

The prices published refer to spot prices subject to import duties of Middle Eastern origin. Deals which are not subject to import duty because of the free trade agreements (FTA) will be included in the assessment, but such prices will be normalised to levels equivalent to those subject to import duties.

Cargoes that are transacted on a floating point based on current spot publication values will be included in the commentary of the weekly report. Floating point premiums/discounts usually refers to prices of transactions done the week before, the week during the bill of lading/notice of readiness and the week after. These premiums/discounts refer to cargoes subject to import duty. Cargoes are also transacted with conditions which deviate from the above clauses, but will not be assessed.

In the absence of deals, offers or bids, the published price range may be adjusted on a notional basis to accurately reflect the levels at which trading activity can take place based on the majority of market sentiment based on highest bids or lowest offers. Factors affecting price movements including supply/demand information; plant operating rates; feedstock, derivative markets and market economics; deep-sea cargo movements and general sentiment, will be taken into account.

Certain prices may be excluded from the range if they have been negotiated in unusual circumstances or if special conditions are thought to apply, for example co-producer deals, customers with a limited supply pool, or market participants with frame contracts.

Individual markets have different characteristics.

CFR Korea: Supply into Korea is currently divided into the following two pricing methods:

1. Contract Pricing based on USCP + European CP. ICIS pricing does not consider this in its assessments.

2. Spot pricing, which occurs occasionally and is included in the range. The price assessment includes trades for typical 3,000-10,000 tonne parcels.

CFR Taiwan: Spot parcels tend to be negotiated based on a price-formula. The price assessment includes trades for a typical parcel of around 3,000-10,000 tonnes.

CFR SE Asia Major Ports: Reflects trades into southeast Asia main ports such as Singapore, Kuantan, Port Klang and Dumai. The price assessment includes trades for typical lots of around 2,000-5,000 tonnes.

CFR China: Price assessment includes typical 3,000-15,000 tonne shipments. The Chinese market is highly influenced by distribution dynamics. Consequently CFR China prices are not always in proportion to the local Chinese Renminbi (RMB) prices. Eastern and southern Chinese markets do not always behave in tandem. Prices in Shandong (northern China) are slightly lower due to the presence of local producers.

The CFR China weekly and daily assessments are assessed independently, without any associated netback calculations. In line with the general methodology, the weekly price range will represent confirmed deals during the week.

The daily price ranges will be based primarily on a reasonable range of bids and offers and repeatable deals as a first priority. A deal that falls outside the main range of price discussions for that day might be excluded as it is considered unrepresentative.

Confirmed deals also have to fall in line with the market discussions for that day/ week which should be repeatable, otherwise ICIS reserves the right to exclude them from the price assessments.

During illiquid trading gaps when there are insufficient deals, the price assessments will be based on bids and offers and lastly, on buying and selling ideas. Assessments will take into consideration bonded warehouse cargoes in the absence of CFR-based deals. The bonded warehouses are typically located in major ports in eastern and southern China.

In line with general methodology, the assessed price range will consist of repeatable confirmed deals, followed by reported deals and lastly best bids and offers.

Ex-tank China: Ex-tank prices from major producers and distributors in eastern and southern China. Ex-tank prices normally include the local taxes, storage costs, handling charges, and are taken as such. They are the net transacted prices. The price is the aggregate of East China (ex-tank) and South China (ex-tank).

East China (ex-tank): Refers to the ex-tank prices at major ports in Jiangsu and Zhejiang. Jiangsu prices are based on ex-tank prices at Taicang, Jiangyin, Nantong, Zhangjiagang, Changzhou, Zhenjiang and Taizhou ports. Zhejiang prices are based on ex-tank prices at Ningbo and Pinghu port. The maximum price is based on transaction prices for a single deal with the minimum trading volume of 100mt.

South China (ex-tank): refer to ex-tank prices at major ports in Zhuhai and Dongguan. The maximum price is based on transaction prices for a single deal with the minimum trading volume of 100mt.

Inland China (ex-works) : Prices based on ex-works prices of local major methanol producers in north China, northwest China, northeast China and southwest China to local buyers.

CFR W.C. India: Since buyers are mostly spot, suppliers have to pay higher vessel freight rates even though the distance between the Middle East and India is closer than the Middle East to China. Price assessments are for typical cargo sizes of 1,000-5,000 tonnes.

Ex-tank India: refers to ex-tank prices in Kandla for cargoes of 100-300 tonnes with a 60-day letter of credit and 30-day storage conditions and includes handling charges.

In the US, contract assessments represent the average benchmark transaction price as reported by the majority of industry sources for medium-to-large buyers. FOB barges are quoted to represent the bid/offer range reported for the whole week (Monday to Friday) and as the bid/offer range reported towards the close of business on Friday (between 1430-1700). Both quotes represent spot price assessments for loading (or delivery) within three weeks of publication date.

In both the daily and the weekly methanol (US GULF) reports, the published spot prices are assessed from business concluded for loading or delivery within three weeks of the publication date, with the exception of prompt parcels that may be a result of distressed sale or a sale with a specific date premium. Quotes are offered for medium to large buyers. In addition, transactions are often completed in the New York Harbor (NYH) at a slight premium to business done in the USG. Such deals are still quoted on an FOB USG basis.

All regional reports offer market commentary that includes details of traced transactions, news on the supply/demand balance, export/import information, contract price negotiations and general sentiment for price direction. Where applicable there is product information, comments on up and downstream market developments and general market intelligence.

17 December 2012