Global Methanol Market See Regional Price Trend Differentiations
Entering January 2024, the global methanol price trends showed regional differentiation, with the prices in Europe and the U.S. remaining in a downtrend and those in Southeast Asia continuing rising. Up to January 12, 2024, the FOB NW Europe price closed at $289.44/mt, down $34.24/mt or 10.58% from end-December 2023, and the CFR SE Asia price closed at $347.5/mt, up 12.5/mt or 3.73%.
Europe: Market supply remained surplus with more cargoes from South America and the U.S.
Two large methanol units in the U.S. are scheduled to take maintenance in February. Supported by this, the European market should be bullish. However, it has remained in a downtrend since last December due to supply increases. For one thing, the continuous declines in the ship traffic volume of Panama Canal since last August led to higher traffic charges, and some South American suppliers had to divert vessels around the Cape of Good Hope. The transport time from South America to China was prolonged from 30-40 days to 55-60 days, and the freight charges also increased by a large margin. For example, the freight charge from Trinidad to China has risen by 71%-100% recently. Against such a background, most South America producers and agencies have chosen to sell more cargoes to Europe rather than Asia. For another, many units in the U.S. kept running at high loads, and most of the resources also flowed into Europe. Local units in Europe also ran steadily. However, the demand in Europe didn’t increase accordingly, so the methanol prices in Europe kept sliding due to constant oversupply.
Southeast Asia: Supply gap and rising benchmark prices supported the market to go up.
One 1,700kt/a methanol unit in Southeast Asia was restarted at the end of December, but the inventory was low. Moreover, influenced by the intensive unit maintenance in Saudi Arabia and Indonesia, there was supply shortage in some areas of Southeast Asia. In addition, the α for 2024 long-term contracts of cargoes to Southeast Asia dropped notably, so most traders actively raised benchmark prices to gain profits. Thus, the methanol prices in Southeast Asia continued rising in January, which also pushed up the prices in some other markets like India.
Forecast: It is predicted that the methanol prices in Southeast Asia may fluctuate at highs, as the supply of non-Iranian cargoes in Asia may be relatively tight in Q1, especially in February and March. However, the markets in Europe and the U.S. may keep weak with the newly added unit going into operation. The supply side may have a larger impact on the overseas market trend in the near term. On the other hand, the supply reduction of overseas methanol resources hasn’t provided more momentum to China’s coastal market which has been more influenced by demand, macro-environment and capital. It is projected that the spot supply in the coastal methanol market may keep loose in the near term. The pre-holiday purchasing volume is less than expected, and some demand has been delayed until after the holiday. Meanwhile, the cost support is also limited. On the whole, the pre-holiday price trend is still uncertain, with the spot prices fluctuating in the range of RMB 2,300-2,450/mt.
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