US spot methanol pricing dropped more than 5% on Wednesday in a market that has seen consistent declines in recent months and particularly in the last two months.
US methanol declined to a fresh 6 1/2-year low Wednesday as the market remains impacted by the strong supply levels resulting from an expansion in domestic capacity, tepid global demand and softness in the wider energy complex.
US spot methanol was assessed at 53.25-53.75 cents/gal FOB USG for January and February, a drop of 3.50 cents -- or 6.1% -- day on day to the lowest level since reaching 53.25 cents/gal FOB USG on May 27, 2009, Platts data showed.
Methanol pricing may move even lower over the next few weeks, a market source said.
US production capacity more than doubled in 2015, leading to firm supply levels domestically and contributing to firm global supply.
Domestic production increased to 5.75 million mt/year last year from 2.25 million mt/year at the start of the year. The capacity growth has come from three plant startups and an expansion project.
Methanex produced its first methanol from the 1 million mt/year Geismar II facility in Geismar, Louisiana, in December. The plant, which started up three months ahead of schedule, should reach full capacity in the coming weeks, the company said.
The other additions to capacity included the startup of Methanex's 1 million mt/year Geismar I facility, an expansion at OCI Beaumont's site to a capacity of 912,500 mt/year, and the October startup of the 1.3 million mt/year Celanese/Mitsui plant.
Global demand has been described as soft, with US demand growth last year coming in below expectations and the competitiveness of Chinese methanol-to-olefins units impacted by the lower crude pricing.
Global spot pricing has also been hovering near lows of six years or more in recent weeks.
European spot pricing reached a six-plus-year low on Wednesday, falling to Eur200/mt ($215/mt) FOB Rotterdam under pressure from high supply levels, weak demand from China and lower oil.
Chinese spot pricing has hovered in the low $200s/mt since mid-December, impacted by weak sentiment and low demand from methanol-to-olefins units in the country.
Chinese spot moved to a three-week high of $205/mt CFR China on Wednesday, but spot pricing has been between $200-$205 for the last three weeks, with spot pricing last near those levels in early 2009, according to Platts data.
