US methanol spot barge prices slip to new yearly low

Source: ICIS News

2018/07/13

HOUSTON (ICIS)--US methanol spot barge prices continued to slip this week from new capacity just started up in Texas, marking a new yearly low.

The slippage set a new 2018 low of 115.50 cents/gal and widened the gap between spot and contract to the broadest point in more than a year.

Market sources attribute the continued price dip to the start-up of the new 1.8m tonne/year OCI Natgasoline plant in Beaumont, Texas, which began commercial operations in late June.

Spot methanol has dropped by 5% since reaching 122 cents/gal in mid-June as Natgasoline neared start-up. The current spot price represents a 22% discount from the July contract of 149 cents/gal.

Earlier this month a methanol analyst said a summer test is coming for the global methanol market in the next quarter or so that should pull down prices in North America and other global regions.

Some methanol watchers claim that spot is a 15% discount from contract, given to most customers, is the historic average. But buyers and traders say the real discount now is at least 20% and has been that way for more than a year, with high volume customers sometimes getting as much as 25% off contract.

“There’s a battle for US market share that is driving higher discounts and lower spot prices,” said James Ray, senior consultant at ICIS.

A trader this week said 110 cents/gal, near the low of last December, seems within range now of the US market.

(clarifies sixth paragraph with details about discounts)