Europe Q3 methanol contract settles down €30/tonne at four-year low

Author: Eashani Chavda

2020/06/25

LONDON (ICIS)--The European methanol third-quarter contract price settled at €225/tonne, a decrease of €30/tonne from the previous quarter.

The settlement was separately confirmed by three sellers and four consumers on Thursday.

The European Contract Price (ECP) was agreed on a free on board (FOB) Rotterdam basis.

The settlement marks the lowest agreed quarterly ECP since Q2 2016.

The market remains bearish heading into Q3, with the settlement dubbed a "compromise" between buyers and sellers.

PANDEMIC HITS EUROPE 
European methanol spot prices crashed between March and April, with the pandemic taking hold of Europe causing downstream shutdowns and a fall in demand.

In the weeks leading up to the ECP spot activity increased, while prices remained volatile given lengthy global supply levels alongside economic uncertainty.

June showed improvements, in comparison to May, though market sentiment remains largely depressed.

Demand is expected to remain at a lower level, but gradually increase over the second half of the year.

There is limited expectation for market recovery, with many downstream sectors likely to stay subdued in the coming months; in particular the furniture and automotive sectors.


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Methanol is primarily used to produce formaldehyde, methyl tertiary butyl ether (MTBE) and acetic acid. Smaller amounts go into production of dimethyl terephthalate (DMT), methyl methacrylate (MMA), chloromethanes, methylamines, glycol methyl ethers, and fuels applications such dimethyl ether (DME), biodiesel and the direct blending into gasoline.

Front page picture: Cars parked at a dealership in the UK; demand for methanol is suffering from the downturn in the automotive industry, among other sectors
Source: Xinhua/Shutterstock 

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