Global Methanol Markets See Different Performances in May
Entering May, the global methanol market saw different price trends in different regions. The markets in Europe and the U.S. underperformed, while the prices in Southeast Asia kept rising. Up to May 17, CFR Southeast Asia closed at $367.5/mt, up 4.26% from end-April and topping the global market prices. Different supply-demand patterns led to price trend differentiations.
Southeast Asian methanol prices rose on supply gap.
Although one Southeast Asian producer’s 1,700kt/a methanol unit is scheduled to restart soon, it has delayed the contract delivery for local and Chinese markets. Considering the supply gaps at a few minor ports in Southeast Asia, suppliers were not willing to sell at low prices. In addition, the α value of term contracts in 2024 dropped from 2023, so most traders actively raised benchmark prices to earn profits. Therefore, Southeast Asian methanol prices kept rising in May, which also pushed up the prices in South Korea and other areas.
Weak demand dragged down the prices in Europe and the U.S.
In Europe and the U.S., two units with a total capacity of 2,650kt/a began to take maintenance in early May, but local prices fluctuated downwards. On the supply side, the inventory in Europe and the U.S. was at a medium-to-high level. In addition, considering higher freight rates and longer transport cycles caused by the detour to the Cape of Good Hope and then to Asia, most South American producers and traders delivered more resources to Europe. On the demand side, the demand from some industries like acetic acid and formaldehyde was weak, and market consumption momentum may further decline amid the high inflation, high borrowing costs and slow productivity growth in Europe and the U.S.
On the whole, intensive overseas methanol unit overhauls and logistics tightness supported the prices to go up in most Asian markets in May, while Europe and the U.S. saw price declines due to local weak fundamentals. In the near term, it is predicted that the supply side will continue to play a key role in the overseas market performance, leading to different price movements in different regions. As for the coastal methanol market in China, the supply crunch may be eased gradually with import arrivals increasing in end-May and early June, and the spot prices are estimated to fluctuate in the range of RMB 2,600-2,800/mt.
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