Global Methanol & MTBE Trade Tracker: July spot trading intensifies globally
Activity in global spot methanol and MTBE markets mostly increased month on month and year on year in July. Methanol spot prices were seen weaker in July from the previous month, creating opportunities to buy more from the spot market.
ASIA: Trading activity in the Chinese methanol market soared 168% on the month to 67,000 mt in July, even besting May sales by 2,000 mt, as methanol prices hit an 18-month low.
Trades early in the month were underpinned by a shortage of tank space and sellers were under pressure to clear existing stock to make way for incoming supply.
Sales also picked up toward the end of the month as a few Iranian methanol plants experienced unplanned outages and CFR China methanol prices rebounded, aided by strengthening crude oil prices.
Inventory at coastal tanks eastern and southern China, however, was stable on the month at 1 million mt, data from market sources showed.
Spot trade activity in the Indian methanol market rose in July 13.4% month on month to 93,000 mt as India continued to attract ample supplies of different origins. Iranian sellers were placing spot cargoes in India due to ample inventories at their plants. Cargoes from Iran were offered at a 2%-4% discount over the average of Platts and ICIS CFR India price. Fixed-price discussions around non-sanctioned cargoes in July were notably tepid as a number of sellers found the CFR levels found non-workable. Downstream formaldehyde producers in India were maintaining lower run rates due to seasonally slow demand from the plywood and laminates sector. A cargo from Venezuela, expected to arrive in the first week of August, was also traded spot. Around 15,000 mt trade of Russia-origin methanol was also confirmed traded for a cargo arriving in the first week of August.
EUROPE: Spot trading activity in the European methanol market remained at level month on month in July. At least 63,000 mt was traded in the spot market for the second consecutive month.
Spot prices adjusted lower on the back of the Eur30/mt drop in the contract prices for Q3 compared to Q2, and stayed in mid-Eur340s/mt to low-Eur350s/mt for the first three weeks of the month before jumping to mid-Eur380/mt the last week of July, amid firm buying. The rise in the US prices combined with logistical constrains caused by the low water level in Rhine river, drove prices up the last week of July.
The FOB Rotterdam marker averaged Eur357.238/mt in July, lower than the Eur368.138/mt in June.
US: Spot trading for July rose month on month despite seemingly sluggish activity, as many trades were done during the month after the Platts Market on Close assessment process from S&P Global Commodity Insights. Sources said spot trading during July increased due to both planned and unplanned US plant outages, with some sources saying producers had initially begun to cut run rates due to oversupply.
According to sources, many trades during July were bought by producers due to the outages, thus causing spot prices to rise. Typically, methanol demand during the summer months remains low due to a lack of demand for windshield wiper fluid — a major use of methanol. Current force majeures on acetic acid, as well as high interest rate on housing, would’ve further contributed to the typical thin demand during the summer season.
Approximately 18,873 mt (150,000 barrels) 150,000 barrels were traded in July, 30,000 barrels (approximately 3,775 mt) more than June. Spot methanol prices have risen nearly 11.7% , or 12 cents, from the month-ago period. Platts last assessed spot methanol prices at 114 cents/gal FOB USG on July 25, according to data from S&P Global.
ASIA: MTBE trade volumes during the MOC were recorded at 4,000 mt in July, a 33% increase from the previous month, S&P Global data showed.
The monthly trade volumes rebounded for the first time after having declined for two consecutive months until June, hit by growing risk-averse trading tendency in the market amid recessionary fears as well as lingering energy supply concerns. The number of bids registered during the MOC reached one in July, which slumped 83% on the month, while the offers were recorded at four. The higher number of offers came amid falling FOB Singapore MTBE prices, pressured by ending peak summer driving demand, as well as easing arbitrage outflows to Europe and the US.
The FOB Singapore MTBE marker dived to a five-month low at $997/mt on July 25 as gasoline blending demand tapered after the summer driving season in the Northern Hemisphere amid absent demand from China due to the prolonged pandemic restrictions.
EUROPE: The volume of MTBE FOR ARA traded in July increased on the month with the total reaching 9,000 mt, marking an 8,000 mt increase month on month and the highest traded volume of 2022 to date.
The Northwest European MTBE market remained tight throughout July with challenging logistics, sources said, while there was also strong demand reflected during the MOC. Demand was healthy despite a narrowing gasoline-naphtha spread that averaged $313.49/mt, down from $491.53/mt in June, showing weaker blending economics.
Selling interest also rose during the month from June, leading to a downward trajectory in prices.
The average European MTBE FOB ARA assessment was calculated at a $457.393/mt premium to the Eurobob August gasoline swap in July, down from $568.71/mt for June average. The outright MTBE prices averaged $1,529.548/mt FOB ARA, down from $1,875.80/mt in June.
US: MTBE spot volumes rose in July to 14,790 mt (125,000 barrels) observed in trades seen during the MOC from 5,917 mt (50,000 barrels) in June.
MTBE traded at a premium to the front-month NYMEX RBOB futures contract for all of July, averaging 58.92 cents/gal ($209.17/mt), compared with an average premium of 111.45 cents/gal ($395.65/mt) in June.
The outright price of USG MTBE fell in July to an average assessment of 328.36 cents/gal ($1,166/mt) from 508.49 cents/gal ($1,805/mt) in June.