US spot methanol stayed on a downward path Tuesday, reaching a fresh near-seven-year low after a Monday holiday in the US.
Platts assessed US methanol at 43.25-43.75 cents/gal FOB USG for January and 42.75-43.25 cents/gal FOB USG for February, down 2.50 cents and 3 cents from Friday, respectively. Platts did not assess Americas markets on Monday in observance of the Martin Luther King Jr. holiday. The assessments represent the lowest level since they fell to 43 cents/gal FOB USG on April 8, 2009, Platts data showed.
Methanol pricing has fallen 25% since the start of the year and 48.5% since the start of November, according to Platts data. Spot pricing has been in a downward trend on firm supply due to expanded domestic capacity, as well as soft demand and a weaker energy complex.
"I heard lots of sellers want to get out of positions, but there really aren't buyers in the market," a trader said.
Demand has been slowing particularly in Europe and Asia, a distributor said recently. That has led to less material being drawn from Trinidad and Tobago, the source said, a country that supplied a significant amount of methanol into the US before demand slowed due to the US capacity growth.
US production capacity has increased to 5.75 million mt/year from 2.25 million mt/year at the start of 2015, contributing to a glut of global supply.
The expansion projects appear primed to continue, as G2X Energy held a groundbreaking at the Big Lake Fuels site in Lake Charles, Louisiana, last week, a move that drew some surprise from market participants given the state of the spot market.
The 1.4 million mt/year facility will begin construction this year and be complete in 2018. The project will later on add facilities to convert the methanol into gasoline.
Other planned facilities along the US Gulf Coast include projects backed by Natgasoline (1.75 million mt/year in 2017), South Louisiana Methanol (1.8 million mt/year in 2017), and Yuhuang Chemical (1.8 million mt/year in 2018).
Also, Northwest Innovations Works has three sites planned for the US Pacific Northwest with a combined capacity of more than 14.4 million mt/year that would begin starting up in 2019.
Market sources have started to look to crude pricing and demand from Chinese methanol-to-olefins units to gauge the markets. Chinese MTO units have been a bit of a bright spot for the industry of late, a market source said. Additionally, sources in Europe have expected an upcoming cracker turnaround season in Asia to lead to improved Chinese MTO demand.
