The FOB US Gulf methanol spot assessment fell to a seven-month low of $1.42/gal ($472.86/mt) Monday as imports reached US shores and spot buyers were difficult to find in the US market, sources said.
Monday's assessment was down 5.5 cents/gal, or $18.315/mt, from Friday's and is the lowest since September 17, 2013 when Platts assessed the price at the same level.
FOB US Gulf prices have fallen since February as large volumes of lower-priced Asian imports were sent to the US Gulf Coast to take advantage of a favorable arbitrage opportunity between the regions.
Between 80,000 mt and 120,000 mt of methanol was fixed for the Gulf Coast region from Southeast Asia for delivery in March, April and May, according to shipping reports and market sources.
The additional material pushed prices in the US market lower as sellers looked to place the material with US buyers who were already well-supplied, sources said.
"Everyone is waiting for the pressure of the vessels coming in to ease and forcing those that still have material to place to feel the pain [in pricing]," said one trading source.
US spot prices have declined 25 cents, or 15%, since February 24, according to Platts data.
As US prices move lower, the opportunity for arbitrage from Asia has narrowed. With CFR China prices at $350/mt Monday and assuming freight of around $90/mt and including a duty of 5.5%, a margin of about $12/mt existed on paper, though no cargoes were heard available. Platts does not assess methanol prices on an FOB basis in Asia.
With CFR Southeast Asia prices assessed at $405/mt Monday and assuming freight at around $90/mt and including a duty of 5.5% the opportunity for arbitrage from the region was closed on paper.
