Demand rise, tight supply lifts global methanol prices

Market: Petrochemicals
21/09/20

Methanol prices around the world are on an upswing with a demand lift and tightening supply across major regions.

In the US, producer buying combined with weather-related outages pushed spot methanol discussions to the upper 70¢/USG range, and they have steadied there for much of September. This is up from spot prices around the low 60¢/USG range in early August amid logistical constraints caused by Hurricane Laura and preparations for a turnaround at a US Gulf coast production unit brought US methanol prices to a six-month high.

Producers were heard buying on the spot market for delivery in October and November, providing support in the outer months and a shift back to contango from a backwardation. Pricing in August and September saw a backwardation emerge on several outages in the Americas region.

Vancouver-based producer Methanex was heard buying on the spot market ahead of a major turnaround at its unit in Geismar, Louisiana. Methanex did not comment.

US-based chemical producer Celanese said last week that demand in China has recovered to pre-Covid-19 levels as industrial production is recovering from the Covid slump earlier in the year. Chinese industrial activity is a proxy for global economic activity, as the country is by far the world's largest consumer of methanol.

In Asia, prices rose to the highest seen in the past six months as a slew of outages in the Middle East hit supply availability for October. Demand in China has also supported the global market.

Spot prices in China surged last week, with offers from regional producers rising to around $250/t cfr China and buyers raising bids to $242/t, the highest since the week of 6 March. Spot prices had plunged to $151/t in May as downstream demand in China collapsed because of the Covid-19 outbreak.

Across the Atlantic, latest values for September and October delivered methanol were heard in the Northwest Europe market at €212/t fob Rotterdam.

The European methanol market has seen a supply crunch. Methanol supply has fallen in Rotterdam in September, with current inventory levels estimated to be around 60-70pc, down from the oversupply situation seen during the second quarter.

The decrease in supply was due to lower import levels over the summer, as some cargoes were diverted away from Europe to supply higher-priced regions. In addition, domestic northwest European methanol production decreased, with some units offline and others reducing utilization rates, as well as a recent period of unexpected and intermittent production interruptions in countries which export methanol to Europe.

But against this backdrop of supply erosion, the market has also seen a recovery in demand in Europe. Formaldehyde demand has increased, with consumption of wood-based products and consumer goods improving, as the market exited lockdown across some EU countries.

By Steven McGinn, Victoria Bagdjian

Global methanol prices ¢/USG

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Viewpoint: Protectionist policies muddy US PE outlook

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Viewpoint: rHDPE packaging grade demand solid into 2025

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Viewpoint: Japan eyes methanol as marine bridging fuel

18/12/24

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Fellow shipping company Nippon Yusen Kaisha (NYK line) is also mulling the development of smaller methanol-fuelled handymax ships that are unable to be equipped with large ammonia fuel tanks, to aid with decarbonisation. Methanol a temporary solution But Japanese firms see methanol mostly as a "bridging fuel" rather than a zero-emission fuel, as methanol can reduce GHG emissions only by 15pc compared to traditional bunker fuel, although it can curb sulphur oxide and nitrogen oxide emissions by up to 99pc and 80pc, respectively. It would be vital to begin introducing much cleaner marine fuels, such as ammonia and hydrogen, to meet the maritime sector's net-zero goal. Tokyo is trying to promote the development of ammonia and hydrogen-fuelled ships by providing financial support, while the utilisation of such clean vessels could materialise from around 2030, the ministry of land, infrastructure, transport and tourism (Mlit) said. Japan's state-owned research institute Nedo plans to provide ¥35bn ($229mn) to support the development of engines, fuel tanks, fuel supply systems and other core technologies for zero-emission ships that use hydrogen and ammonia, as well as LNG and e-methane, under its ¥2.76 trillion green innovation fund. But the grants are much larger than those for the development of methanol-fuelled ships, which are currently available only from Mlit and the environment ministry, with the amount of ¥100mn per vessel over two to three years. The scheme has been open for application every year since 2023. But the ministries' scheme also targets LNG-fuelled ships, with a breakdown of allotment for methanol-powered vessels unclear. By Reina Maeda and Nanami Oki Japanese firms' methanol projects Methanol-fuelled ships Company # of vessel Type Target commercialisation Announcement Mitsubishi Gas Chemical, Mitsui OSK Line 1 Ocean-going methanol carrier Jul-05 May-23 Toyofuji Shipping, Mitsubishi Heavy Industries 2 Ro-Ro vessel 2027-28 fiscal year Jun-24 Mitsui OSK Line 1 Coastal methanol carrier Dec-24 Jul-24 NS United Kaiun, Nihon Shipyard, Jaman Marine United, Imabari Shipbuilding Multiple Bulk carrier After 2027-28 fiscal year May-24 Orix, Tsuneishi Shipbuilding 2 Bulk carrier Jul-24 Production Company Product Country Target commercialisation Target capacity (t/yr) Mitsui E-methanol US Jan-24 1630000 Mitsubishi Gas Chemical Bio-methanol Japan Jun-24 Small amount Mitsubishi Gas Chemical, Kobelco E-methanol Japan NA NA Cosmo, Toyo Engineering E-methanol Japan NA NA Sumitomo Chemical E-methanol Japan 2030s NA Mitsui, Asahi Kasei Bio-methanol US Jun-23 NA Toyo Engineering E-methanol India 2030 NA Investment Company Product Country Target commercialisation Target capacity (t/yr) Mitsui E-methanol Denmark NA 42,000 Idemitsu E-methanol Brazil, US, Chile, Uruguay, Australia 2,030 4,000,000 JOGMEC E-methanol Brazil, US, Chile, Uruguay, Australia 2,030 4,000,000 Mitsu OSK Line E-methanol Brazil, US, Chile, Uruguay, Australia 2,030 4,000,000 Table source: Firm's company releases Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

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