Indian Methanol Market Sees Price Increase Amid Upstream Pressure and Supply Concerns
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Methanol prices in India rose due to supply disruptions from Iran and Malaysia, rising natural gas costs, and increased demand post-Lunar New Year. While supply remained stable in early February, future shortages could drive further price hikes. Industrial buyers, especially in the formaldehyde and resin sectors, are influencing market volatility.
Key Highlights
- Price Surge Due to Supply Disruptions – Methanol prices in India increased by ₹1.00/kg following the shutdown of Iran’s Zagros and Malaysia’s Petronas plants, along with rising futures contracts.
- Market Speculation on Price Trends – An 8% surge in natural gas prices and recovering demand post-Lunar New Year have fueled speculation of further price increases.
- Stable Supply but Future Disruptions Expected – While supply remained steady in early February, disruptions from Iran’s plant shutdown could tighten availability later in the month.
- Demand Shifts Among Industries – Bulk drug manufacturers showed weak demand, while formaldehyde and resin manufacturers actively procured inventory, creating market volatility.
Methanol Prices Surge Amid Supply Disruptions and Rising Demand
- Methanol importers in India have raised prices by ₹1.00/kg with immediate effect, following a surge in futures contracts and supply disruptions due to the shutdown of Iran’s Zagros methanol plant and Malaysia’s Petronas facility.
- Additionally, the return of Chinese buyers after the Lunar New Year holidays has boosted methanol trade activity across Asian markets.
- Market participants had anticipated an upward trend last week, as rising upstream natural gas prices exerted additional pressure, keeping methanol prices firm.
- Current methanol prices in India (60-day credit basis) are:
1. Ex-Kandla: ₹30.75/kg
2. Ex-Mumbai: ₹31.00/kg
3. Ex-Hazira: ₹31.25/kg
4. Ex-Vizag: ₹35.25/kg
5. Ex-Kakinada: ₹35.50/kg
6. Ex-Kochi: ₹37.00/kg - In the Asian market, CFR China methanol futures saw an increase of $2/MT. Meanwhile, natural gas prices surged by nearly 8% on 3rd February, fueling speculation of a potential methanol price recovery post-Lunar New Year.
- Methanol futures contract prices:
1. CFR China, 2nd Half Feb 2025: $309/MT (up $5)
2. CFR China, 1st Half Mar 2025: $307/MT (up $4)
3. CFR China, 2nd Half Mar 2025: $307/MT (up $4)
4. CFR China, 2nd Half Mar 2025: $306/MT (up $5)
Methanol Market Faces Supply Constraints, Price Increases Expected
- Methanol supply in India remained stable in the first half of February due to scheduled vessel arrivals. However, the unexpected shutdown of Iran’s Zagros plant is expected to disrupt supply in the latter half of the month.
- The recent increase in natural gas prices, coupled with the rise in Asian benchmark methanol prices, has intensified speculation in the market. Many participants anticipate short-term price hikes.
- Trading activity remains subdued as bulk drug manufacturers are largely inactive due to weak demand. However, formaldehyde and resin manufacturers are actively procuring inventory, capitalizing on price dips and reacting to price jumps, thereby contributing to market volatility.
- India’s methanol demand was approximately 240 kt in 2024 and is projected to rise to 280 kt in 2025. Notably, domestic producer GNFC, which previously relied on imports, is now meeting its captive requirements through in-house production.
- Domestic Methanol Production Capacities
1. GNFC: 22.39 kt/month
2. Deepak Fertilizers: 7.26 kt/month
3. Vinati Organics: 134 MT/month
4. RCF: 7.36 kt/month
Chemical Market News
- WTI crude oil rose by 1.22% to $71.86/barrel.
- Natural gas prices increased by 3.25%, settling at $3.41/MMBtu.
- CFR China methanol benchmark prices stood at $308/MT.
- Iran and Malaysia Shutdowns Drive Methanol Price Volatility
- PETRONAS Chemicals Group, a major methanol producer in Malaysia, announced a plant turnaround on 9th January 2025.
- The facility, which has an annual production capacity of 1.67 million MT, is undergoing maintenance, which could impact regional supply.
- Iran’s Zagros Methanol plant announced a shutdown on 7th February 2025 due to natural gas shortages. The plant has a production capacity of 1.65 million MT per annum.
Expert Opinion: Methanol Demand Grows
- Methanol prices are expected to remain volatile this week, driven by the Zagros plant shutdown. However, downstream demand remains weak. Buying interest from formaldehyde and resin manufacturers is likely to provide some support to prices, especially as seasonal demand begins to pick up.
Daily Market Report
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