Will deterred downstream demand in India and Germany create a downfall in Methanol prices

Asian Methanol market retreated in the wake of being driven higher by the recent spike in crude oil costs for the past two weeks, as market players took on a bearish perspective on near term market. The speculative purchasing of Methanol was ended as crude costs fell as the ceasefire arrangements between Russia and Ukraine. In India, the price of Methanol slipped to $443/ton Ex-Mumbai on March 25. The downstream gasoline blending demand was also affected in the Asian market. India’s domestic Methanol prices were declined due to the expectation of an Iranian export surge resulting in oversupplies in the market. However, in China, the cost of Methanol remained on the higher end. On 25th March, the price of Methanol surged to $385/ton CFR Qingdao, China with a weekly inclination of 0.79%. Robust coal prices and low inventories among the enterprises resulted in such a price trajectory.

Feedstock Natural Gas TTF (Title Transfer Facility) future fell below USD 120 per megawatt-hour amid easing concern about energy shortage. Methanol prices tumbled in Europe amid weak market sentiments and sufficient product availability despite strong energy values. In Germany, the cost of Methanol slipped to USD 582/ton FD Hamburg. The prices are still on the higher end, and the dip was observed due to increasing production rates of the industries with weak demand from its downstream derivatives market. In the USA, the prices are still on the higher end due to supply shortage and a gradual increase in the export of Natural Gas to the European region. In the USA, the price of Methanol is observed to be USD 559/ton Ex-Louisiana.

According to ChemAnalyst, the prices of Methanol will increase in the upcoming weeks due to surging Natural Gas prices. The drone attack on Saudi Arabia from Yemen on the Natural Gas plant will also impact the Natural Gas prices in the global market. The rising conflict between Russia and Ukraine will increase the export trading market of the US to the European region, which will also impact the Methanol market. The crippling availability of the product in the global market will robust the downstream gasoline blending market, increasing the Methanol price.