METHANOL TRADE TRACKER: October spot volumes in Asia, Europe down as supply outages shrink supply

New York — Spot activity in the European and Asian methanol chain has slowed down during October, according to S&P Global Platts data. While methanol global supply contracted due to plant outages, limiting spot demand in Asia, demand in MTBE was affected by a weaker gasoline market.

Source: S&P Global Platts

Unit: mt

Methanol

ASIA: China methanol traded volume in October totaled 15,000 mt, down from 95,000 mt in September, according to Platts data.

Chinese end-users, especially methanol-to-olefins plants, slowed their spot purchasing in October as imported Chinese methanol prices firmed on production cuts and supply disruptions, trade sources said.

There were not many vessel arrivals from Iran into China in October and trading activity shrank in that segment of the market.

Additionally, availability of spot cargoes of non-Iranian origin was tight with producers preferring to send product to India and South Korea as those markets gave better netbacks.

In India, October methanol purchases in the spot market totaled 60,000-70,000 mt, down from September, market sources said.

Trading activity in the country was lower due to limited domestic supply, while the high cost of imports acted as a further deterrent for buyers. "Local market prices have not risen in tandem with import costs," a local buyer and distributor said.

Spot trade is expected to be relatively limited in November as well due to fewer offers from Middle East producers, another source said.

EUROPE: Methanol spot activity fell in October due to limited availability of product and in line with seasonality.

Around 62,500 mt were heard traded on a FOB Rotterdam basis in October, down 48% from September. However, this was up from the 25,000 mt heard traded in October 2019.

Usually market activity slows down in October following the settlement of the fourth quarter contract price. However, this year demand for spot material was relatively healthy due to unplanned and planned maintenance.

Looking ahead, views on November activity were mixed. Several sources expected demand to pick up from the second half of November, ahead of the negotiations for the first quarter contract price. Others said supply in Europe will improve in November and demand for additional volumes will be limited.

MTBE

ASIA: Asian MTBE MOC trade volume in October recorded at 15,000 mt, according to Platts data. The monthly MOC trade volume in October was down 6.3% from September, but up 275% from the average monthly MOC trade volume in the first half of 2020.

The Platts Asia MTBE MOC trading market has been active in the second half of 2020, mainly driven by the recovery of the gasoline blending market since June and higher volatility in the upstream energy market, which encouraged the physical trading activities. The 92 RON gasoline crack was negative from mid-March until June during the height of the COVID-19 first wave. The 92 RON crack was at $2.98/b on Oct. 29, Platts data showed.

EUROPE: According to Platts data, Europe MTBE MOC trade volume was 15,000 mt in October, down from 19,000 mt in September. MTBE FOB ARA prices fell $62/mt on month from $427.50/mt on Oct.1 to $365.50/mt on Oct. 29. The biggest monthly price drop since March. This comes after gasoline demand turned bearish as European countries increased restrictions and lockdowns. The uncertainty in the market resulted in reduced activity with buyers and sellers remaining idle. "Nothing is happening in MTBE markets right now and I don't see any activity happening any time soon," a source said on Oct. 28.