OfBusiness Chemicals Dailies | 7th July 2023

Price

• The price of domestic Methanol has dropped after a week of increase due to a pessimistic market outlook.
• Importers have lowered the price of Methanol by Rs.0.25/kg to Rs.23.25++ Ex Mumbai and Kandla, with cash payment terms.
• Bulk deals have been reported at around Rs.23.50++ Ex Mumbai with 60 days cash payment terms and 45 days of free storage.
• Traders offer prices between Rs.23.5-24.5++ Ex Kandla and Mumbai with 60-90 days credit terms, depending on the minimum order quantity.
• One of the major importers mentioned that the shipment delay had little impact on Methanol prices due to weak demand from downstream sectors.

Demand and Supply

• The rally in domestic Methanol prices could not be sustained for more than a week due to efforts to reduce replacement costs. Last week, there was a temporary recovery in domestic prices due to news speculations about delayed vessel arrivals, but the market sentiment changed dramatically because of the poor demand from downstream sectors, according to a bulk buyer.
• Methanol consumption in India, usually around 220kt per month, has dropped to 170-180kt due to weak demand from downstream sectors.
• Primary consumers, such as Bulk drugs, Formaldehyde, and Amine manufacturers, still operate at reduced production rates due to low end-user demand.
• Similarly, other downstream consumers, including MTBE, Sodium Methoxide, and Reagent manufacturers, are also experiencing weak product rates.

News

• In the international market, upstream natural gas prices have increased by 0.8% to 2.63$ in the international market.
• Downstream CFR China Methanol prices have remained stable at 350 $/Mt.
• A leading Methanol manufacturer, Kaveh Methanol company in Dayer, Iran, unexpectedly shut down on July 1, 2023, due to technical issues. The plant has an annual production capacity of 2.3 million mt/year.
• Another plant, Zagros Petrochemical Company, located in Asaluyeh, Iran, resumed its operations on July 4, 2023. The plant has an annual production capacity of 1.65 million mt/year.

OFB’s Opinion

• It is anticipated that domestic Methanol prices will continue to experience volatility and a mixed trend. This can be attributed to the conflicting factors of shipment delays and lower replacement costs.
• However, the rising costs of natural gas, a key feedstock for Methanol production, are expected to provide support and potentially influence higher prices in the market.