LONDON (ICIS)--European methanol spot prices continued to decrease this week, losing €7-10/tonne, ICIS data showed on Friday, once again on a very small number of deals.
While some of the quietness can be attributed to public holidays in many countries, underlying interest to spot trade has been quiet for several weeks now.
Contractual offtake remains healthy and stable, but demand in the spot market is low. Selling interest has been equally low, aside from two traders apparently willing to sell at low numbers.
Some sources believe the downward pressure is the result of cargoes of uncommitted material arriving from Asia, which the above traders need to sell.
“Some parties are not in the market. And if product is coming in from Asia, of course some [players] are under pressure [to sell],” said a producer.
However, others said the proportion of these cargoes that is uncommitted has been exaggerated, with much of the material serving to replace those volumes lost through certain maintenance turnarounds.
A second producer said that some of the material being offered by traders was not purchased from Asia on a spot basis, but received via contracts from European suppliers.
With spot prices having been higher than net contract prices for much of the past two-to-three years, purchasing via contracts to sell in the spot market has been a profitable practice. Now, however, this strategy will result in a loss, the producer said. This could explain the relative lack of sellers in the market.
The producer said the downward pressure was the result of a combination of uncommitted cargoes arriving, weak sentiment and the absence in the market of a certain player that normally buys large volumes of spot material.
The presence this year of material in the US from LyondellBasell’s restarted 780,000 tonne/year Channelview, Texas, plant means there is likely to be more Trinidadian methanol available to Europe.
Additionally, material is understood to be arriving into the Mediterranean from Iran, and was suggested that certain producers may have less of a deficit to cover than is often the case.
European spot prices were assessed at €315-320/tonne ($438-444/tonne) FOB (free on board) Rotterdam for the week ending 2 May.