Northwest European methanol spot prices have fallen below Eur300/mt for the first time since October 2, 2012, under pressure from ample supplies in the market, according to sources.
Platts assessed spot methanol at Eur299.50/mt ($411/mt) FOB Rotterdam Tuesday, down from 50 cents from Monday. This puts spot prices at a 27% discount to the Q2 contract price of Eur412/mt.
"The issue is supply, not demand. The general economic state is healthy, with strong demand from the wood panels, biodiesel and formaldehyde markets. There is just too much material in the market," a source said.
Another source echoed this view on supply sentiment and also said that overcapacity and oversupply in Southeast Asia had exacerbated the supply situation in Europe.
"Currently, I see 600,000-700,000 mt/year overcapacity in Southeast Asia, and a lot of material has been coming through to Europe," he said.
"I expect no more Asian imports on a large scale, and with the stabilizing market in Asia, I expect it to shore up prices here [in Europe]," a third source said.
Asian methanol spot prices were assessed at $356/mt CFR China and $398/mt CFR Southeast Asia Monday, unchanged from Friday.
The US spot price slipped 2 cents to to be assessed at 126.75-127.25 cents/gal FOB USG ($422.91/mt) Tuesday.
Looking ahead, one market participant said the combination of second-quarter plant turnarounds and an anticipated rebound in Asian prices would likely shore up European prices.
In the short term, however, sources were uncertain about the likely direction of spot prices or what might be the price floor.
"It will not be unusual to see deals being done at Eur290-300/mt this week. May is getting heavy and tanks are overflowing," a source said.
