Methanol Prices Decrease in India Amidst Weakening Downstream Demand

Key Highlights

1. Methanol Prices Drop Amid Weak Demand
   • Importers reduced prices by ₹1.00/kg; future contracts corrected.
2. Potential Price Recovery Post-Chinese Holidays
   • Rising natural gas prices (+8%) may push methanol prices higher.
3. Stable Supply with Active Bulk Buying
   • India’s methanol demand is projected to rise from 240 kt (2024) to 280 kt (2025).
4. PETRONAS Plant Shutdown May Impact Supply
   • Malaysia’s 1.67 MMT facility is undergoing maintenance, affecting regional availability.

Methanol Prices Decline, But Upward Pressure Looms 

• Methanol importers in India have reduced prices by ₹1.00/kg, effective immediately, following a correction in future contracts. This price decrease is attributed to weakening downstream demand.
• However, market participants anticipate that higher upstream natural gas prices may keep methanol prices elevated post-Chinese Lunar holidays. An industry source noted that while prices have decreased, the upward trend in natural gas costs could lead to a rebound in methanol prices.
• Current methanol prices in India on a 60-day credit basis are as follows:
  1. Ex-Kandla: ₹29.50/kg
  2. Ex-Mumbai: ₹30.50/kg
  3. Ex-Hazira: ₹30.25/kg
  4. Ex-Vizag: ₹34.25/kg
  5. Ex-Kakinada: ₹35.00/kg
  6. Ex-Kochi: ₹36.00/kg
• In the Asian market, CFR China methanol future contracts have declined by $2/MT. However, feedstock natural gas prices surged nearly 8% on 3 February, sparking market speculation about a potential methanol price recovery post-Chinese Lunar holidays.
• Futures contract prices for methanol are as follows:
  1. CFR China, 1st Half Feb 2025: $303/MT
  2. CFR China, 2nd Half Feb 2025: $303/MT
  3. CFR China, 1st Half Mar 2025: $302/MT
  4. CFR China, 2nd Half Mar 2025: $301/MT
  5. CFR China, 2nd Half Mar 2025: $312/MT

Indian Market Sees Stable Supply and Strategic Buying 

• Methanol supply in India remains stable, with healthy vessel arrivals scheduled for this month. Market participants are closely monitoring natural gas prices, which are expected to influence methanol prices.
• Trading activity in the domestic market has decreased as market participants anticipate a price correction due to competitive Iranian shipments. Bulk buyers, such as formaldehyde and resin manufacturers, are actively participating in the market, covering inventory at every low.
• India's methanol demand stood at 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 fulfilling 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

Global Chemical Market Fluctuations: Crude, Gas, and Methanol Trends 

• In the global commodities market:
  1. WTI crude oil rose 0.66%, reaching $79.19/barrel.
  2. Natural gas prices declined by 2.76%, settling at $4.13/MMBtu.
  3. CFR China methanol benchmark prices stood at $309/MT.
• PETRONAS Plant Turnaround to Influence Regional Supply. PETRONAS Chemicals Group, a key methanol producer in Malaysia, announced a plant turnaround on 9 January 2025. The facility, with an annual production capacity of 1.67 million MT, is expected to undergo maintenance, potentially impacting regional supply dynamics.

Expert Opinion on Chemical Market Trends

• Methanol prices are likely to remain mixed this week due to decreased downstream demand and lower replacement costs. 
• However, increasing buying activity from formaldehyde resin manufacturers is likely to support methanol prices as seasonal demand picks up.