The US methanol market has slowed down this week after seeing interest in sending cargoes to China ahead of the Lunar New Year, sources said this week.
Opportunities appeared to have dried up, with US pricing not quite low enough, shipping space becoming tight and Lunar New Year celebrations approaching, sources said.
Material has been seen en route to China this week, with sources saying the Fairchem Sabre will carry 17,000 mt of methanol from the US Gulf Coast to China in the first half of the month.
"There's an armada of ships heading that way," a trader said.
Tightening ship space has pushed freight rates up, with a source saying rates have moved above $70/mt. Ship space has been fairly tight so far this year even before rates started to move up, sources said, owing to the longer voyages and the static number of ships.
US spot methanol pricing has also been slightly above the levels needed to work an arbitrage this week. US methanol pricing would need to be near 40 cents/gal for arbitrage opportunities to China, a source said.
Platts assessed US spot methanol on Tuesday at 41.75-42.25 cents/gal ($141/mt) FOB USG for February and March. Asian spot methanol was assessed at $207/mt CFR China.
Global methanol pricing has been under pressure from expanded production capacity and weaker crude pricing, a point LyondellBasell CEO Bob Patel echoed on Tuesday.
The increased capacity has also impacted trade flows, with material from Trinidad and Tobago and Venezuela that typically came to the US now seeking to enter the European market, sources there said.
US production capacity has increased to 5.75 million mt/year from 2.25 million mt/year at the start of 2015, with additional projects planned for the US targeting China as a primary export destination.
