Background
ICIS is implementing a process of rolling consultation on all of its pricing methodologies. Consultation paper GMC05/19 is part of this formal process and covers all of the ICIS primary price points included in the methanol weekly publications. Methanol-Methodology-Consultation-2019
Summary
The consultation asked general questions about the suitability of the ICIS pricing methodology.
ICIS received 18 responses. This summary takes into account all responses.
To the question about the reliability of the current ICIS methanol methodology: one respondent said ICIS gives a neutral and balanced view of the market, with fewer mistakes or misses than other services.
Regarding the Europe contract reference price, one respondent asked for a monthly contract price assessment.
On the Europe spot market, six respondents asked for ICIS to provide a daily quote.
There was a request for greater clarity in the timing definition, asking for “current month or next month” instead of “one month forward from date of publication.”
The same respondent and another asked for ICIS to investigate whether a narrower timing window would be more suitable, eg 30 days instead of 60 days.
One respondent specifically asked for quotes for named months.
Moving to the Asia Pacific report, two respondents noted that, in the absence of trades on a CFR China basis, it was not valid to use China domestic RMB numbers and futures numbers to create the assessment.
In contrast, four responses were in favour of using domestic and futures prices for CFR China.
One respondent asked for the weekly China CFR assessment to be split into two assessments: one including sanctioned product and the other non-sanctioned product. Also for ICIS to make every attempt to verify China CFR prices which cannot be found through import statistics.
Two responses asked for a weighted average of spot deals, and to exclude prices from sellers buying or from buyers selling.
For the WC India spot assessment, one respondent asked for the laycan to be limited to 2-4 weeks from date of publication, also noting that the ex-tank India market should not be used as a component of the CFR WC India assessment.
Further to this on India, the same respondent noted that lone bids or offers did not accurately reflect the market, and that local trader sales should not be used for the CFR range.
ICIS Decision
ICIS will keep checking the Europe market to see if there are enough participants in the monthly contract price to support a monthly contract assessment.
ICIS will do a two-week trial of daily reporting, to see if there is sufficient liquidity to provide daily numbers. A subscriber note to this effect will go out on the weekly ICIS Europe Methanol report.
ICIS will survey the market to see if there is support for changing the timing for the Europe spot assessments.
Regarding the China assessments, ICIS does not plan to make changes to the current spot methodology. The verification of deals is already part of the methodology process. The China domestic RMB and futures numbers are used as a reference to validate the information received from the market and are not directly used to create the assessment. ICIS had already looked into the potential splitting of the weekly CFR China assessment but understands from other market players that such a move would further dilute spot liquidity, as the majority of methanol import purchases are on a term basis.
ICIS will continue to review the spot liquidity in the China import market to ascertain if it makes sense to move towards a weighted average of spot deals or to exclude transactions involving sellers buying methanol or buyers selling the product.
Regarding India, ICIS has already narrowed the laycan to 2-6 weeks from the date of publication, but market opinion was against further narrowing it to 2-4 weeks. Only in a period of no liquidity is the ex-tank India market used as an element in the CFR WC India assessment.
Lone bids or offers are cross-checked with market players and ICIS does not use such information for assessment purposes if the checks call into doubt the accuracy of the information. Trader sales of import parcels are not excluded, as these are seen as a valid part of the market.