Methanol cargoes other than from Iran are attracting premiums of $5-10/mt on a CFR China basis due to tight supply because of plant shutdowns and payment issues due to sanctions on Iran, market sources said Monday.
Bids for non-Iran cargoes are now around $360-365/mt for 3,000-5,000 mt cargoes to be delivered in the second half of December and H1 January.
Meanwhile, bids for Iranian cargoes are only $355/mt maximum. Typically, the price of both Iranian and non-Iranian cargoes are similar on a CFR China basis, with Iran being China's single largest supplier of methanol, accounting for about half of its monthly requirement.
Sellers were offering Iranian methanol at $360/mt, compared with $370/mt for non-Iranian cargoes.
NON-IRANIAN METHANOL SUPPLIES TIGHTEN
The unexpected shutdown of Salalah Methanol Company's 1.095 million mt/year plant in Oman for three weeks in October has resulted in a production loss of approximately 60,000 mt. And Canada-based Methanex's 1.3 million mt/year Damietta plant in Egypt was shut in November following violent protests near the harbor.
Malaysia's state-owned Petronas has shut its Labuan No. 1 and 2 methanol plants since mid-November on feedstock issues, and they have yet to be started up. The No. 1 line has a capacity of 660,000 mt/year and No. 2 line of 1.7 million mt/year.
Brunei Methanol Company's 850,000 mt/year plant in the Sungai Liang Industrial Park was unexpectedly shut for about two weeks mid-November and Indonesia's Kaltim Methanol Industri's 660,000 mt/year plant at Bontang is still shut for a 40-day maintenance. It is scheduled to restart December 13.
The shutdowns have taken a toll on the supply of non-Iranian methanol, adding to the tightness from the non-availability of Iranian stocks.
PAYMENT ISSUES HIT IRAN CARGOES
Meanwhile, with Western sanctions on Iran expanded to include companies that support Iran's oil and petrochemical industries, paying Iranian companies had become more challenging, traders said.
"The economic sanctions have led to the closure of the original payment channels via South Korea or Japan," said a trader based in China. "I'm still trying to figure out how to make it work."
