August Argus European monthly methanol CP at €525/t

Author Argus

The Argus European monthly methanol contract price (CP) for August is €525/t, a rollover from July, as gains in feedstock natural gas are supporting methanol values, despite inventories being well-stocked in Rotterdam.

While rising inflation still represents a risk to methanol derivative markets, the market has not yet seen a significant erosion in end-consumer demand, several sources on both the consumer and producer side said. But a rise in feedstock natural gas prices could put pressure on margins for some methanol producers and a decrease in operating rates in the US could potentially challenge inflows of methanol into the EU, participants said this week. Freight rates also remain high.

US Henry Hub gas prices rose above $8/MnBtu by Wednesday close, while in Europe the TTF month-1 contract exceeded $60/MnBtu yesterday. High natural gas prices in Europe have already led to a European unit being idled since summer 2021.

The weaker €/$ exchange rate was also a factor which would support European methanol prices, several sources said, despite methanol inventories in Rotterdam being high for the time being.

Monthly contract prices

The European methanol market is now seeing some monthly contract price agreements, as several producers and consumers eye flexibility in renegotiating their contracts on a more regular basis, compared with the traditional quarterly pricing structure.

Methanol contracts in Europe are largely negotiated on a quarterly or even annual basis, but some market participants in various sectors said they have begun to negotiate and price at least part of their contracted methanol supply on a monthly basis.

In late February, a monthly methanol contract price was heard agreed between a producer and consumer at €495/t for March supply, while in June, a contract for methanol supply in July was heard concluded at €525/t. This month, a settlement for an August methanol contract was heard agreed between a producer and buyer at €525/t.

One methanol consumer has switched to monthly contract pricing for the supply of methanol to one of its derivative production units in Europe.

Argus launched a European monthly contract price assessment in February.

Send comments and request more information at methanol@argusmedia.com

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