European Methanol Prices Jumped

Compared with China’s methanol prices, European methanol prices always remained at a low level. However, European methanol prices surged last week, attracting the players’ attention. SCI makes a brief analysis as follows:

There were intensive unit overhauls in Europe in April and May. From June to July, there are still 2-3 large methanol units scheduled to take overhauls. In addition, the logistics was influenced by the Russian World Cup. Among the 8,065kt/a methanol capacity in Europe, the capacity in Russia takes up 60.63% and the output over 50%. During May 25 and July 25, both the sea and train transportation of hazardous chemicals will be greatly affected by the Russian World Cup. Consequently, the methanol supply in Central and Western Europe, the major methanol consumption areas in Europe, will be influenced notably. (Central and Western Europe need to import methanol due to insufficient capacity.)

From early 2018, one 800kt/a methanol unit in Venezuela remained under maintenance, 60%-70% of whose products were delivered to Europe, so the resources from Venezuela to Europe reduced heavily. Meanwhile, from end-April to early May, Indian methanol prices rose sharply to $390-410/mt, which attracting some Middle Eastern resources for arbitrage. In addition, the southern ports in Oman suffered some damages due to the hurricane Mekunu, which also indirectly influenced its methanol delivered to Europe.  

Entering summer, the gasoline demand in Mediterranean areas and Eastern Europe rose significantly, which supported the MTBE prices. Therefore, the demand for methanol also grew.

In addition, Q3 European contract price is to be issued, so a few traders are active in short-covering for pushing up the contract price.

At present, European methanol prices have surpassed the prices in China, even Southeast Asia, reaching a global high. However, whether this uptrend will last and attract Asian resources are still uncertain. On the one hand, the merchantable resources in Middle East and Southeast Asia are limited. On the other hand, the largest demand still comes from China. In addition, the operating rate of the new 1,750kt/a methanol unit in the U.S. has been lifted to 60%-70%, and its sales mode is also needed to be paid attention to.