Domestic Methanol and Acetic Acid Prices at Par, Creating Market Buzz

Key Highlights:

1. Methanol Prices Spike – Prices increased by ₹2/kg due to supply constraints, with importers quoting ₹35.00–₹36.00/kg across major ports.
2. Supply Uncertainty from Iran – Limited vessel arrivals and plant shutdowns in Iran have tightened availability despite high inventory levels.
3. Weak Demand in Key Segments – Bulk drug manufacturing saw a sharp decline, while Acetic Acid, MTBE, and Amines demand remained sluggish.
4. Potential Price Correction Ahead – Despite near-term bullishness, weak downstream consumption and declining futures suggest possible price adjustments.

Methanol Prices Surge Amid Supply Disruptions

• Methanol importers have raised prices by ₹1/kg, quoting:
  1. ₹35.00++/kg Ex-Kandla
  2. ₹35.50++/kg Ex-Mumbai
  3. ₹35.25++/kg Ex-Hazira
  4. ₹36.00++/kg Ex-Visakhapatnam
• All quotes are for 60-day credit terms.
• Meanwhile, trader offers remained mixed at:
  1. ₹34.50++/kg Ex-Kandla
  2. ₹34.75++/kg Ex-Mumbai
• Both quotes are for advance payment terms.
• The parity between Acetic Acid and Methanol prices has stirred discussions in the market, as it reflects weak market fundamentals.
• The sharp rise in Methanol prices is primarily driven by news of an unplanned shutdown at a major  Methanol plant .
• On a week-on-week basis, domestic Methanol prices have surged nearly ₹2/kg.
• Contrastingly, the Asian benchmark CFR China future contracts have shown a downward correction, attributed to sluggish downstream demand:
  A. 1st Half March 2025 CFR China Methanol: $299/ton (down $4)
  B. 2nd Half March 2025 CFR China Methanol: $299/ton (down $4)
  C. 1st Half April 2025 CFR China Methanol: $298/ton (down $2)
  D. 2nd Half April 2025 CFR China Methanol: $298/ton (down $2)

Supply & Demand: Limited Iranian Shipments Drive Market Uncertainty

• Methanol supply remained constrained in February 2025 due to limited vessel arrivals. Despite adequate inventory at ports, prices surged as buyers grew wary of uncertainties surrounding Iranian shipments.
• Substantial inventory accumulation was observed between late January and mid-February 2025, as several Iranian Methanol plants announced shutdowns due to natural gas shortages.
• On the demand front, key consumer segments have exhibited mixed trends:
• Bulk drug manufacturers significantly curtailed production in February, leading to a drastic decline in demand.
• Formaldehyde producers have displayed steady week-on-week demand, supported by seasonal trends.
• Amines, MTBE, and Acetic Acid production continue to see weak demand amid unfavorable downstream conditions.
• India's total Methanol demand is estimated at 280 kt per month.
• Domestic Methanol Production Capacities:
  1. GNFC: 22.39 kt/month
  2. Deepak Fertilizers: 7.26 kt/month
  3. Vinati Organics: 135 kt/month
  4. RCF: 7.36 kt/month

Market News: Downstream Demand Remains Weak in Key Segments

• In the international market, upstream crude oil and natural gas prices showed upward momentum:
  1. WTI Crude Oil: Up 1.01% to $69.30/barrel
  2. Natural Gas: Up 0.62% to $3.98/MMBtu
• PlanQatar Fuel Additives Co. (QAFAC), a major Methanol producer in Qatar, announced an unplanned shutdown this week. The plant has a Methanol production capacity of 1.10 million tonnes per annum.

Expert Opinion: Price Corrections Expected 

• Methanol prices are expected to remain bullish in the near term, driven by concerns over Iranian shipment disruptions. 
• However, weak downstream demand and declining futures contracts could lead to a potential price correction. Buyers are advised to exercise caution before making inventory decisions.