VINACHEM

European methanol oversupply continues to dominate the market and an improvement in demand could not avoid some lower spot trades last week.

Spot trading started at a slight decrease from the previous week, with €162/tonne reported on Tuesday.

As the week progressed, spot prices came down further with players becoming more subdued and re-adjusting their expectations for June.

The European methanol spot price mid-point softened by €0.50/tonne from the previous week.

Following price drops in the US and Asia this week, Europe is the highest-priced region for methanol spot for the first time since July 2019.

OVERSUPPLY DOMINATES

Although demand is likely to improve this month, in comparison with the previous two months, surplus material remains in Rotterdam.

"There are good signs of slow demand picking up, slow degrees yes. But on the other side we do have fairly high inventory and stock globally; US, Europe and Asia, mainly in China - they have to swallow that first, before kick-off new demand," said a producer.

Some players suggested that further production outages need to be carried out in order to help the market balance recover over Q3.

“Everyone has the same expectations for Q3 by the way. They also have the interest to see a higher price environment, but that's currently not in sight”, the producer added.

Another producer said some market players are "a little bit nervous", not only in Europe, and did not forecast a recovery in the third quarter.

"There’s simply too much product in Asia, and length in the US. Q3 is not going to be pretty”, it said.

Methanol is primarily used to produce formaldehyde, methyl tertiary butyl ether (MTBE) and acetic acid.

Smaller amounts go into production of dimethyl terephthalate (DMT), methyl methacrylate (MMA), chloromethanes, methylamines, glycol methyl ethers, and fuels applications such dimethyl ether (DME), biodiesel and the direct blending into gasoline.