Methanol prices in Asia have risen to more than three-year highs on the back of a persisting supply crunch exacerbated by an unplanned outage in Southeast Asia.
S&P Global Platts assessed CFR China methanol up $7/mt on the day at $405/mt Wednesday, while CFR SEA methanol was assessed at $416/mt, up $10/mt on the day.
Prices were last assessed above these levels on March 12, 2014, at $410/mt CFR China and on April 8, 2014, at $420/mt CFR SEA, respectively.
This uptick was attributed to a lack of supply regionally as Malaysia's Petronas Chemicals began an unexpected shutdown of its 1.7 million mt/year No. 2 methanol plant at Labuan Tuesday due to a technical issue, a company source said Wednesday.
Inventories at major Chinese ports were also heard to be in shorter supply at 349,500 mt Friday, down 42,500 mt from the previous week, and 285,700 mt less than at the start of the fourth quarter, industry sources said.
Prompt domestic prices in China also shot up Wednesday, assessed at Yuan 3,750/mt, equivalent to $449/mt on an import parity basis, up Yuan 270/mt from Tuesday.
However, market sources pointed to a steep backwardation suggested by futures activity on the Zhengzhou Commodity Exchange.
The actively traded January methanol futures contract on the Zhengzhou Commodity Exchange closed at Yuan 3,266/mt Wednesday, up 3% on the day.
Nonetheless, prices are expected to enjoy support going into the first quarter from seasonal supply tightness in winter as natural gas is redirected from a methanol feedstock to heating purposes in China and Iran, industry sources said.
