Biomethanol-methanol diff widens, UK demand ticks up

Market: Biofuels, Oil products, Petrochemicals
14/02/25

The spread between biomethanol and conventional methanol is the highest in more than nine months, at $734/t.

This is partly driven by falling European methanol prices, with the methanol fob Rotterdam barge quote hitting $348.97/t on 12 February, the lowest since 7 August. Increased imports from the US, and the restart of a 900,000 t/yr capacity European plant have put downward pressure on prices.

Biomethanol values ticked higher in recent sessions, tracking gains in the wider biofuels complex after record low values for renewable fuel tickets — tradeable credits generated primarily by the sale of biofuel-blended fuels — in major European demand centres in 2024.

European demand for biofuels in 2025 could be supported by a combination of higher mandates for the use of renewables in transport, and by changes to regulations on the carryover of renewable fuels tickets in Germany and in the Netherlands.

UK biomethanol prices and demand rise

In the UK, the Argus cif biomethanol price has averaged $1,110/t so far in February, a $22/t increase from January and a $60/t rise from the September 2024 average, when prices hit a record low. The price averaged around $1,094/t in February last year.

Prices have been in part supported by stronger renewable fuel ticket prices (RTFCs) in the UK recently, according to market participants. UK 2025 non-crop RTFCs averaged 25.45p in the first quarter of 2025 so far, an increase of 1.88p when compared with the previous quarter.

Demand picked up in the UK and the wider European market, including from voluntary sectors, at the beginning of the year, participants said.

Biomethanol is used as a gasoline blending component in the UK. Consumption in the country in 2024 rose by 45pc on the year but was lower by 7.9pc than in 2022 at 58mn litres, according to the third provisional release of the 2024 Renewable Transport Fuel Obligation statistics.

The Argus biomethanol fob Amsterdam-Rotterdam-Antwerp (ARA) netback quote was $1,083/t on 12 February.

FuelEU fuels demand

The January rollout of the FuelEU Maritime regulations could increase demand for biomethanol in shipping.

Ship operators traveling in to, out of and within EU territorial waters must reduce their greenhouse gas (GHG) intensity on a lifecycle basis by 2pc. The reduction rises to 6pc from 2030 and gradually reaches 80pc by 2050.

Shipping companies can choose from a range of alternative marine fuels to reduce their emissions. Only dedicated ships can run on methanol alone, but many companies, including Maersk, have ordered dual-fuel vessels that can run on methanol and traditional bunker fuels, along with biofuel blends like B24 — a mix of very-low sulphur fuel oil (VLSFO) and used cooking oil methyl ester (Ucome) biodiesel.

International offtake agreements for renewable methanol are also on the rise. Maersk has signed several letters of intent for procurement of biomethanol and e-methanol from producers including Equinor, Proman and OCI Global, and has an agreement with Danish shipping and logistics company Goldwind for 500,000 t/yr from 2024.

Biomethanol and e-methanol are likely to be the most competitive and scalable pathways to decarbonisation this decade, Maersk said. While relatively small, Maersk's 'green marine' fuel consumption, which includes biomethanol, increased by 38pc in 2024 to 3,034 GWh.

Singaporean container shipping group X-Press Feeders said it will buy biomethanol from OCI's Texas plant starting from 2024.

Biomethanol bunker sales in the port of Rotterdam dropped by more than half in the fourth quarter of 2024 compared with the third quarter, to 930t, but sales were 86pc higher than those in the fourth quarter of 2023, according to Port of Rotterdam data.

UDB risk to biomethanol imports

The European Commission's proposal to exclude automatic certification of biomethane and biomethane-based fuels from the Union Database for Biofuels, if relying on natural gas that has been transported through grids outside the EU, has been slowing some negotiations for 2025 biomethanol imports — particularly from the US — according to market participants.

Industry bodies have expressed concerns about implementation of the database, particularly that it will impede the bloc's biomethane development.

Burdensome fees, overly strict deadlines, risk of double counting, and a significantly increased number of participants required to enter data will slow market growth, said the European Compost Network and the European Waste Management Association. They recommend mandatory use of the UDB be postponed until 1 January 2026 "at the earliest".

By Evelina Lungu

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