The initial Northwest European methanol contract for the fourth quarter settled late Thursday at Eur315/mt ($434.50/mt) FOB Rotterdam, up Eur20 from the third quarter, sources said.
The initial settlement was between Solvadis and Mider-Helm as producers as BASF as a buyer.
Mider-Helm and BASF confirmed, while Solvadis could not immediately be reached for comment.
"We expect other customers to follow at the beginning of next week," a source at Mider-Helm said, adding most customers had already informally agreed on a rise.
The fourth quarter settlement is the highest since the first quarter of 2011, which was also settled at Eur315/mt FOB Rotterdam.
"While we recognized there was grounds for an increase, reaching consensus was difficult because nobody really knows how the current economic gloom will impact demand in the fourth quarter," a source at BASF said.
"If everything stays as it is, with demand stable and no substantial impact on downstream sales due to all this turmoil in the financial markets, I guess we had a balanced settlement. But if demand falls, then we might have agreed on a contract that is too high," the source added.
An increase in the European contract price comes as methanol costs remain well supported across all regions, market participants said.
Spot methanol sold in China on a CFR delivery basis was assessed by Platts Thursday at $412/mt, the highest since Platts began assessing it in May 2010.
In the US, spot prices for barges traded in the Gulf hit a multi-year high of 125 cents/gallon ($416/mt) on August 4 as production issues in Central America triggered a rally in Atlantic markets. This was also the highest level registered since Platts began assessing the US Gulf market.
In Europe, spot methanol traded in Rotterdam has so far averaged Eur264.75/mt ($376/mt) in the third quarter, putting the continent as the weakest price region globally during the period. US Gulf prices have averaged 120.15 cents/gallon ($400/mt) in the same period, while CFR China was $396.50/mt, Platts data shows.
A recent drop in the euro-dollar exchange rate, which fell Monday to the lowest level in seven months of $1.3499, has helped depressed European spot prices further, sources said.
