CFR China Methanol Climbs to $260/MT; India Sees Price Correction on Iranian Cargo Impact
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Indian methanol prices dropped ₹0.50/kg despite limited inventories and early-month demand. Weak downstream consumption and low-cost Iranian cargoes drove the correction. However, rising Asian benchmarks and firming crude may soon reverse the trend. Buyers are advised to stock up as demand from formaldehyde and pharma may strengthen in June.
Key Highlights
- Domestic methanol prices fell ₹0.50/kg, with ex-Kandla offers at ₹24.50++/kg.
- Trader quotes remain higher, e.g., ₹25.25++/kg ex-Kandla.
- CFR China benchmark up $3/MT to $260/MT, signaling global firmness.
- Formaldehyde demand improved, but plywood/resin sectors slowed due to early rains.
- Buyers advised to build inventory, anticipating supply risks and rising prices.
Methanol Prices Dip Despite Tight Supply
- Domestic methanol prices declined by ₹0.50/kg, despite limited inventories and healthy liquidation in the early part of the month. Import offer prices as of today are:
a. ₹24.50++/kg ex-Kandla
b. ₹24.60++/kg ex-Mumbai
c. ₹24.75++/kg ex-Hazira
d. ₹28.00++/kg ex-Visakhapatnam
e. 60-day credit terms - However, trader-level quotations remain slightly elevated:
a. ₹25.25++/kg ex-Kandla
b. ₹24.75++/kg ex-Mumbai
c. on 60-day terms - Meanwhile, Asian benchmark CFR China methanol rose by $3/MT to $260/MT, signaling firming international sentiment.
- The domestic price correction is primarily attributed to:
1. Lower replacement costs for Iranian-origin cargoes
2. Weakening demand from downstream sectors
Supply & Demand: Downstream Demand Mixed as Monsoon Hits
- Methanol supply remained stable through May 2025. However, downstream demand showed mixed signals:
- Formaldehyde production picked up sharply in mid-May on account of seasonal demand.
- However, early monsoon rains led to a dip in demand from the plywood and resin sectors by late May.
- Bulk drug manufacturers remained cautious, adopting a "wait-and-watch" approach due to cheaper cargo replacements.
- Port inventories at Kandla and Hazira have built up, as liquidation slowed significantly. Activity from southern traders also remained sluggish.
- Interestingly, Asian markets strengthened, with CFR China prices firming on increased trading activity, as per a leading indentor.
- India Methanol Market Overview - Estimated Monthly Demand: 280,000 tonnes
- Key Domestic Producers: Producer - Capacity (kt/month)
1. GNFC - 22.39
2. Deepak Fertilisers - 7.26
3. Vinati Organics - 135.00
4. RCF - 7.36
Chemical News: Port Inventories Build, Activity Slows in South
- WTI crude oil: ↑ 4.17% to $63.32/barrel
- Natural gas: ↑ 5.98% to $3.65/MMBtu
Expert Insights: India May See Price Rebound
- Despite short-term stability, methanol prices in India may witness upward pressure due to:
a. Firming global benchmarks
b. Potential disruptions in Iranian cargo arrivals
c. Strengthening demand from resins and pharma intermediates - Buyers are encouraged to build inventories during price dips to hedge against future supply risks and price surges.
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