Price and market trends: Asia cargoes pressure US methanol

28 March 2014 09:44 Source:ICIS Chemical Business

Two 17,000 tonne cargoes are headed to the US from Indonesia and Malaysia. US spot prices fall further

More methanol shipments from southeast Asia have pushed US spot barge prices down by 5 cents/gal, sources said on 20 March.

US spot barge prices began slipping earlier this month on news of four other methanol shipments.

Prices slipped further during the week of 17 March to 157-158 cents/gal from 162-163 cents/gal at the close of trading on 14 March.

The latest shipments are two 17,000-tonne cargoes, one on the Chemstar Masa out of Bontang, Indonesia, loading at the end of March, and the other on the Fairchem Mustang from Labuan, Malaysia, loading in the first half of April.

Methanol sources said there are no known plant outages, though a plant in Venezuela has a turnaround scheduled in April.

Methanol plants in Trinidad have been experiencing cutbacks in natural gas supplies since January, so those conditions are not new.

Sources said the dip in US spot barge prices has created some worry in the US market, particularly among those who chartered the shipments. “They’re a little panicked,” a seller said.

CHINA PRICES PLUNGE
The panic over imports totalling 110,000 tonnes stems from the recent collapse in methanol ­prices in Asia and China, but more so in China than in ­southeast Asia, a US trader said.

China spot methanol prices have dropped more than 20% this year, putting a burden on producers in Indonesia and ­Malaysia to find new customers, hence the US shipments.

But a look at the major costs involved shows a narrow window of opportunity that may already have closed.

Asian methanol spot prices on Thursday ran $440-450/tonne, as assessed by ICIS.

Those prices are $80/tonne lower than US spot barge prices, which convert to about $526/tonne.

But the Asian discount does not quite cover the cost of shipping to the US, which is $90-95/tonne on the cargoes, according to brokers.

“I would’ve thought the arb was closed,” a US trader said.

By Lane Kelley