Berlin — European spot methanol prices are expected to hover at around the Eur300/mt (about $338/mt) FOB Rotterdam level or below for the next three years on additional global supply and a low oil price, sources said on the sidelines of the 49th annual meeting of the European Petrochemical Association in Berlin Monday.
Receive daily email alerts, subscriber notes & personalize your experience.Register Now
Spot prices in October have fallen to a more than four-year low of Eur248/mt FOB Rdam on Friday, according to Platts data, and prices remained under pressure at the start of the trading day on Monday as offers for November loading barges were heard at Eur248/mt FOB Rdam.
"It will stay at around Eur300/mt for the next three years as long as US product is cheap and tracks the levels of oil production from Saudi Arabia [the high oil production levels that were contributing to current low oil prices] there's no reason to see a higher price," the producer source said.
Another source, meanwhile, said that he expected prices to stay below Eur300/mt, taking into account oil prices of around $50-60/barrel and lower energy consumption.
He said that some derivative dimethyl ether units in Asia were only utilizing 40% or 50% of normal capacity compared with average levels of 70%.
In other cases, this meant that some derivative methanol consumers could opt to use cheaper methanol as opposed to other substitutes.
In September, with ethanol more expensive, production margins for methanol derivative MTBE in Northwest Europe were nearly three times higher than for ETBE.
MTBE feedstock costs amounting to $431/mt on a cash margin basis, resulted in a production margin of $275/mt. At the same time, ETBE feedstock costs amount to $659/mt, resulting in a cash production margin of $94/mt, according to Platts data mid-September.
--Miguel Cambeiro, firstname.lastname@example.org
--Edited by Maurice Geller, email@example.com