Key methanol buyers in Taiwan are scrambling to purchase additional spot cargoes ahead of a May 1 rampup of sanctions against Iran, sparking a flurry of activity in a market typically satisfied with contract volumes, Taiwanese traders said Thursday.
As part of ongoing sanctions against Iran, it will become illegal May 1 for European Union-based insurers to insure Iranian petrochemical shipments to non-EU countries.
Uncertainty over the impact of the move has already pervaded the region's largest methanol buyer, China, where some sellers are unwilling to sell down their cargoes despite limited domestic demand.
"No one knows what will happen come May 1 so ... there is no reason to dump material into the market now. At most, dump it a month later," one trader said.
Traders in Taiwan said they were actively looking for volumes this week, despite flat demand in the domestic market.
One said he was trying to almost double his typical inventory of 3,000-4,000 mt to 5,000-6,000 mt as he was afraid prices would spike after May 1.
Another major buyer wanted to fill his tank to its maximum capacity of 42,000-43,000 mt, when his typical level is around 30,000-31,000 mt.
"I'm trying to establish some inventory because we are concerned about the Iranian problem ... I'm pushing my contract supplier to give me more, but there is none," the source said, who felt that it was natural that suppliers would try to hold on to cargoes until after May 1.
The buying idea on a CFR Taiwan basis was around $380/mt Thursday, almost flat to CFR China. Typically, CFR Taiwan trades at a slight discount to China.
Taiwanese traders who are bidding higher agreed that with competition for limited volumes rising, prices on a CFR Taiwan basis will have to keep pace with those in other regions.
