European methanol was assessed at a 32-month high of Eur331/mt FOB Rotterdam Thursday as traders were heard trying to build inventories to meet post-Lunar New Year holiday demand in China.
Methanol inventories at Chinese ports have been low recently on lower imports and as new methanol-to-olefins producers have been heard purchasing a bulk of the volumes to keep a steady inventory next to their plants. MTO plants with a total capacity of 4.5 million mt/year have been started up in China recently and more startups are scheduled for later this year.
According to the latest data from Chinese customs, methanol imports into China stood at 587,848 mt and 679,918 mt in October and November, respectively. On average, monthly methanol imports into China usually stand close to 1 million mt.
"A few vessel delays and lower inventory levels are driving prices higher", said a market source. "Also, some cargo [originally] bound for Europe from the Middle East has probably been diverted to China."
China has been weighing heavily on European markets as it is $15/mt or more cheaper to transport material to Asia from the Middle East than to Europe, several market participants said.
"European markets will need to find an equilibrium price in the coming weeks," a second source said this week in reference to product absorption by Asian markets. "People are likely to buy up stocks ahead Chinese buyers reentering the market following the Chinese New Year."
However, a third source questioned the number of players involved in the deals. "I'm not sure who are buying and selling at the moment," the second source said. "Generally January is a quiet month and not many deals get done. This year is no exception so I don't rule out a desperate buyer skewing prices."
