Europe methanol spot falls for second week as coronavirus takes toll

Author: Eashani Chavda

2020/02/10

LONDON (ICIS)--European methanol spot prices sank for another consecutive week as uncertainty around coronavirus led to consumer hesitancy.

"What's happening in China right now is impacting the sentiment, not necessarily supply and demand fundamentals," said one producer.

The first half of last week was quiet, with bids and offers at €230-236/tonne for February and €230- 237/tonne for March.

By Friday, trades were agreed at reductions compared with the previous week.

Spot prices were assessed at €232-236/tonne FOB (free on board) Rotterdam.

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"Everyone's got one eye on China to see what's happening over there [...] Dampened sentiment in Europe. Nonetheless, the market is relatively balanced, and that's why we haven't seen any lower than [€232/tonne]", said another producer.

Many players took a wait-and-see approach to global trade and activity in China last week.

The Shanghai Municipal Government extended the Lunar New Year holidays until 9 February in an attempt to limit the spread of the coronavirus, and as a result Chinese methanol demand dipped in early February.

Meanwhile, recent production shutdowns have helped balance global supply conditions to some extent, with reduced exports to China.

In Iran, government-imposed gas curtailment initiatives led to plant shutdowns.

Zagros Petrochemicals attempted to restart its production at Asaluyeh, Iran, but had to shut down once more last week.

HARD TO GO LOWER
For now, European players await China's return to the methanol market, after-which an uptick in demand is expected.

Some sellers suggested that there was no room for further price decreases this month.

"Domestic prices are at low €230's [/tonne] here in Europe, it's kind of the floor. It would not surprise me if H2 February and beginning of March that we're going to see higher prices again", said another seller.

"Our offers will start again next week or the week after. [....]The market was really strong before the Chinese New Year. The only change we see now is this virus.  As soon as that is under control we'll see it back up to €290, €250 [/tonne] Rotterdam."

Front page image: An empty street in Beijing
Source: Wu Hong/EPA-EFE/Shutterstock