India methanol spikes on tight supply; may not sustain gains

SINGAPORE (ICIS)–Methanol prices in India have spiked by 14.4% in less than two weeks to their highest so far in 2019 largely due to tight supply, but the gains may not be sustained amid continued weakness in demand.

Spot prices on 17 April stood at Indian rupee (Rs) 28.75/kg ex-tank, up Rs3.625/kg from 8 April, according to ICIS data.

Vallarpadam Terminal in Kochi, Kerala, India (Photo by Olaf Kruger/imageBROKER/REX/Shutterstock)

Unsold methanol stocks at Indian ports were extremely low, and the next vessel carrying imports will not arrive until the end of the week due to a berthing delay, market players said.

The present tight supply was caused by logistical delays due to an accumulation of vessels, particularly at the Kandla port in India’s western Gujarat state.

Methanol inventory at the port was low at 10,000 tonnes at the start of the week, according to an industry source.

Imported volumes from Iran – which account for about 80% of India’s methanol imports – are currently limited due to some unexpected plant shutdowns from end-January up to early April.

Major Iranian plants are currently running at full capacity, with the exception of one that is undergoing a short scheduled turnaround.

Some Indian players expect methanol inventories at ports to remain at low levels up to mid-May, as Iranian producers and most other sellers from the Middle East had indicated that they will not able to supply more than the allocated volumes to India in the near term.

A tender for 10,000 tonnes of non-Iranian origin methanol for early May arrival was issued this week, and closed on 17 April.

Buying indications for the tender were at $315-325/tonne CFR (cost & freight) WC (west coast) India, with the final price not expected to go beyond $340/tonne CFR WC India, some market players said.

The results of the tender are due out on Thursday.

This should help ease the tight supply in India but not so soon as the imported volume will only arrive in India after about three weeks, they said.

Some market players were wary of a sharp price correction once methanol-bearing vessels start to arrive with regularity and port inventories rise back to normal levels amid weak demand.

Demand from the downstream sectors has not improved significantly as expected in April, which marks the start of India’s financial year.

“Although ex-tank prices had been going up, transactions volumes were really small and only the most desperate of buyers are buying in order to keep their plants running,” an Indian distributor said.

A number of buyers do not expect prices to remain high for long.

“Since most Iran plants were operating at high rates now, there was no reason why they could not supply regular volumes to India given the fact that our import prices are one of the most attractive in the region,” a second distributor said.

On 12 April, India’s spot import prices for methanol were assessed at $290-320/tonne CFR WC India, according to ICIS data.

Focus article by Kite Chong

($1 = Rs69.52)