US methanol watchers expect 12-15 cents/gal drop for July contract

HOUSTON (ICIS)–US methanol watchers expect another big monthly drop for the July contract, with sources contacted on Tuesday predicting a 12-15 cents/gal decline, which is comparable to the June reduction.

Their expectations stem from a huge gap between spot barge prices and monthly contracts, which was also a factor in the June decline. June postings by Methanex and Southern Chemical (SCC) averaged 155 cents/gal, with spot prices this week at 109 cents/gal.

Methanex and SCC historically have set the monthly range with their postings.

Spot barge prices have plunged 35% since early March on an influx of Asian imports to the US, prompted by plant restarts in the Middle East and southeast Asia.

At least one new methanol import shipment is on the way. Late last week, a broker reported an 18,000 tonne cargo on the Chemroad Oasis headed to the US Gulf from Labuan, Malaysia.

With shale gas dominating the headlines and ethane a major talking point in the petrochemical industry, ICIS editors in Houston are closely monitoring the situation. See the ICIS special report on shale, ethane and US ethane exports here.