Upstream Price Increases and Iranian Shipments Disruptions Shape Methanol Outlook

Methanol Price

• Domestic methanol prices witnessed an increase of ₹1.00/kg as importers adjusted their offers upwards. The updated prices, based on advance payment terms with immediate lifting, are as follows:

1. Ex-Kandla: ₹27.00++
2. Ex-Mumbai: ₹27.50++
3. Ex-Hazira: ₹27.25++
4. Ex-Vishakhapatnam: ₹32.25++
5. Ex-Kakinada: ₹32.00++
6. Ex-Kochi: ₹32.75++

• Traders, however, quoted even higher rates:

1. Ex-Kandla and Mumbai: ₹28.00++
2. Ex-Vizag: ₹32.50++ on 60-day payment terms.

Methanol Supply & Demand

• Methanol supplies from Iran have been significantly constrained due to multiple plant shutdowns, resulting in tightened availability. Despite subdued demand, importers raised prices today in response to the supply crunch.
• Key segments like bulk drugs continue to see weak demand, a trend expected to persist through November 2024, particularly following the CHPI exhibition later this month. Formaldehyde and amine manufacturers are operating at reduced production levels due to decreased demand from end-use sectors.
• India's monthly methanol demand stands at approximately 240–250 kt. Among domestic manufacturers:

1. RCF has a production capacity of 7.26 kt/month.
2. Deepak Fertilizers produces 8.33 kt/month.
3. GNFC operates at 22.39 kt/month.
4. Vinati Organics has a capacity of 134 mt/month.

• Replacement costs for December arrivals are anticipated to remain high, further aggravated by geopolitical tensions, including conflicts in the Middle East and the ongoing Russia-Ukraine war.
• Iran, a key supplier of methanol to the Asian market, is now facing disruptions in shipments, which is likely to have significant implications for global supply chains. This is expected to disproportionately impact Indian markets, which are heavily reliant on Iranian imports for methanol and toluene.
• Traders have begun actively building inventories in anticipation of prolonged shortages, contributing to the price surge observed since yesterday.

Market News

On the international front:

1. Upstream Natural Gas: Prices rose by 5.61% to $3.37.
2. Downstream CFR China Methanol: Prices increased by $3 to $291/mt.

Plant News

• Sinopec's Ethylene Complex in Tianjin, China, with an annual production capacity of 1.20 million mt, commenced a plant turnaround on November 13, 2024.
• Celanese in Singapore, a major manufacturer of ethyl acetate (85 kt/year) and butyl acetate (60 kt/year), resumed operations in the third week of November 2024 after a shutdown in mid-October.

Expert Opinion

• Methanol prices are expected to remain volatile, driven by ongoing supply constraints from Iran and Russia amid geopolitical conflicts. Additionally, trader inventory buildup is likely to exert further upward pressure on prices in the near term.