Shipowners in China willing to call on Iran after the May 1 ramp-up of sanctions are asking for freight rates of $70-75/mt to travel on the Iran-China route, up from$45-55/mt previously, market sources said Monday.
Meanwhile, Iran-West Coast India freight rates have risen from the typical $25-29/mt to around $40/mt, said ship brokers.
"The low-$40/mt [rate] was for April, but I believe owners will still do it in May if there are cargoes willing to pay such numbers," said a shipbroker based in Asia.
Methanol traders and shipbrokers that do Iranian business said the shipowners in China offering the higher rates included Ding Heng and Sinochem. This could not be confirmed directly with the companies named.
Shipbrokers added that owners in South Korea and Turkey have been calling on Iran, and that they are likely to continue doing so after May 1.
According to market sources, including an Iranian producer, two 10,000 dwt vessels have been fixed for May-loading methanol.
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.
However, Ding Heng and Sinochem have been able to secure insurance cover from both large and small Protection and Indemnity or P&I clubs in China, a trader in the country said.
A methanol trader based in Singapore said that some new spot vessels have also entered the market, but did not provide further details.
According to a shipbroker who does Iranian business, vessels may ballast from China to Iran before returning with contract volumes of chemicals and lubes. "Palms to West Coast India is the next option," he added.
Methanol prices in Asia have surged in the lead-up to the May 1 ramp-up of sanctions, with CFR China prices rising $10/mt or 2.6% week on week to $394/mt last Friday.
Iran is a major supplier of methanol to China, delivering a little over 40% of the country's requirements in January and February.
The CFR India marker rose $26/mt, or 7.5%, week on week to $375/mt last Friday as the reality of tighter supply set in. Only one trader was able to purchase a cargo from an Iranian trader, at $355/mt CFR India, which will load end April.
Other traders said there was a dearth of available volumes for sale, and were bidding at least $370/mt for CFR India cargo, narrowing the spread between India and the region's most liquid market, China. The spread stood at $19/mt last Friday, compared with $35/mt a week before.
The gain in methanol prices has outpaced that of other petrochemical products, in part because of its comparatively lower value. A trader based in Hong Kong said Iran is prioritizing moving higher-value products such as aromatics out of Iran over methanol.
