SINGAPORE (ICIS)--Asia’s methanol market have posted gains following a record-breaking crude oil jump on Monday, on concerns about potential supply issues in Saudi Arabia.
On 16 September, methanol prices were assessed higher by $7.5-11.0/tonne from the previous session at $237.5/tonne CFR (cost and freight) China; and at $250/tonne CFR SE (southeast) Asia, according to ICIS data.
An attack on Saudi Arabia oil facilities on 14 September has resulted in feedstock cuts to Saudi petrochemical producers due to damages to crude oil pipeline and processing facilities.A satellite photo made available by the US Government and DigitalGlobe shows the Abqaiq oil field in eastern Saudia Arabia, 15 September 2019.(Photo by US GOVERNMENT/HANDO/EPA-EFE/Shutterstock)
Saudi Arabia's methanol capacity - all located in Al Jubail - totals more than 7m tonnes/year, more than half of which is operated by Ar-Razi Saudi Methanol Co – a joint venture between SABIC and Japan’s Mitsubishi Gas Chemical.
|Plant||Capacity ('000 tonnes/year)|
|Ar-Razi Saudi Methanol 1||700|
|Ar-Razi Saudi Methanol 2||720|
|Ar-Razi Saudi Methanol 3||850|
|Ar-Razi Saudi Methanol 4||850|
|Ar-Razi Saudi Methanol 5||1,700|
|Methanol Chemicals Co (Chemanol)||233|
|International Methanol Co||420|
|International Methanol Co||780|
Source: ICIS Supply & Demand Database
Saudi Arabia is a major exporter of methanol to China and SE Asia.
China's January-settlement methanol futures were extending their gains on Tuesday morning, rising 2% after posting a 4.59% spike on Monday.
In the CFR China market, buying indications for non-Iranian shipments for mid-October was at $255/tonne, up $10 from previously traded level.
A 15,000-tonne Iranian end-September cargo were traded at $220/tonne, against previously reported deal at $208/tonne.
"The market is still in a boiling sentiment, as no one could yet pinpoint the extent of impact," a China-based trader said.
Nevertheless, limited available storage tanks on east China prohibited the number of buyers to a few key players.
In the CFR southeast Asia market, buyers of Saudi material switched to local producers for immediate products, but regional producers were closely monitoring the situation while waiting for a better premium to sell.
As the current spread between CFR China and CFR SE Asia remained narrow, southeast Asian market is not a favourable destination for regional producers.
As such, cargo-holders waited for fixed price negotiations to inch higher or target a higher premium over average CFR SE Asia published price.
As a traditional receiver of Saudi shipments, Indian domestic methanol prices climbed to rupees (Rs) 19.5-19.75/kg on an ex-tank basis, as distributors worried about higher replacement costs.
The Indian rupee continued to weaken against the US dollar on Tuesday morning following recent sharp spikes in crude prices, which spell higher import cost for the south Asian country.
Focus article by Keven Zhang
($1 = CNY7.09; $1 = Rs71.80)