European methanol players unsure where bottom lies

04 April 2014 19:01 Source:ICIS News

LONDON (ICIS)--Spot prices in the European methanol market decreased for the fifth week running and it is unclear for how long this trend will continue, sources said on Friday.

The prices have decreased despite prompt availability being tight. Demand remains strong and steady and there is very little uncommitted physical volume in northwest Europe, with some suppliers indicating they have had to turn down spot requests.

Much of the European decline has come on the back of even greater decreases in Asia. The open arbitrage has seen shipments which have been booked from Malaysia, but these are not due to arrive in time to ease prompt tightness. Nevertheless, spot prices continue to decrease for front month loading.

Certain suppliers feel those that have sold short in the spot market may be caught out, with no fresh supplies arriving in time and the prices increasing again sooner rather than later.

Suppliers said that there is likely some further room for prices to decrease, but not much.

The downward trend in China has slowed and prices look to be approaching the bottom, if it has not been reached already.

However, a consumer noted that the price spread between Europe and the Asia Pacific market remains very large, and that European prices will likely continue to fall after Asian prices have bottomed out to close the gap.

By Ross Yeo