Indian Methanol Prices Surge with Traders Building Inventory Amid Speculation

28 Oct 20242 Min ReadDaily Market Report

Methanol prices have risen slightly due to geopolitical concerns despite weak demand, especially in Indian markets. The shutdown of major methanol plants in Iran and Oman could further increase prices, though ample inventories and lower seasonal demand in end-user industries may prevent major volatility.

Key Takeaways:

Despite low demand, methanol prices increased slightly, with regional variances between ports. Prices for Ex-Kochi stand highest at ₹31.75++, while Ex-Kandla and Ex-Mumbai are set at ₹27.50++ and ₹28.00++ respectively.
High inventories and reduced production in major consuming sectors are limiting demand.
Shutdowns in major methanol plants in Iran and Oman contribute to potential price increases, while weaker downstream demand may moderate volatility.

Chemical Price: Current Methanol Pricing Across Key Regions

Despite sluggish demand, domestic methanol importers have raised prices by ₹0.25/kg, citing a ripple effect from escalating Middle East tensions.
Current methanol prices offered by importers
Ex-Kandla: ₹27.50++ (advance payment, immediate lifting)
Ex-Mumbai: ₹28.00++ (advance payment, immediate lifting)
Ex-Hazira: ₹27.50++ (advance payment, immediate lifting)
Ex-Visakhapatnam: ₹31.50++ (advance payment, immediate lifting)
Ex-Kakinada: ₹31.00++ (advance payment, immediate lifting)
Ex-Kochi: ₹31.75++ (advance payment, immediate lifting)
Trader offers are higher, with rates at ₹28.50++ for Ex-Kandla and Mumbai, and ₹31.75++ for
Ex-Visakhapatnam on 60-day payment terms.

Chemicals Supply & Demand Dynamics

Supply remains ample with considerable inventories across all ports. Demand, however, remains weak as major methanol consumers—including bulk drug, formaldehyde, and amine manufacturers—are operating at reduced production rates due to a seasonal drop in downstream demand following the Diwali holiday period.
India’s methanol demand stands at approximately 240-250 kt per month. Domestic production capacities are as follows:
RCF: 7.26 kt/month
Deepak Fertilizers: 8.33 kt/month
GNFC: 22.39 kt/month
Vinati Organics: 134 mt/month
Replacement costs for November arrivals are elevated, with the Middle East crisis generating concern over potential shipment delays from Iran. Following the supply disruptions caused by the Russia-Ukraine conflict, Iranian methanol shipments have been a significant source for the Asian market. Now, any interruptions in Iranian supply could create broader market impacts, according to market participants.
Indian markets, which rely heavily on Iran for methanol and toluene, may see price fluctuations as traders capitalize on the current speculation, building inventories and driving up methanol prices over the past two days.

Global and Domestic Chemical Industry News

In international markets, upstream natural gas prices declined by 4.72% to $2.43/MMBtu. Meanwhile, downstream CFR China methanol prices rose by $3, reaching $291/MT.
In plant news, Kaveh Methanol Company, a major methanol producer in Iran with a capacity of 2.30 million MT/month, initiated an unexpected shutdown on October 7, 2023.
Additionally, OQ Methanol in Salalah, Oman, began a turnaround on October 3, 2023. This facility has a methanol production capacity of 1.20 million MT/year.

Expert Opinion on Methanol Market Trends

Methanol prices are expected to remain volatile, influenced by ongoing Middle East conflicts and increased inventory buildup by traders. Additionally, the major methanol plant shutdowns in Iran could support elevated methanol prices in the short term. However, weakened downstream demand and high port inventories may temper methanol price increases.