Methanol Report
(An Analysis by Roger Moyers)

The month of August has been relatively non-eventful with methanol production rocking along without interruption, and demand remaining at levels where receiving adequate supplies was not a problem. If there is a highlight to the month, it would come in the methanol spot market where prices continued to climb without logical explanations. When polled, some traders would comment they could make cases for methanol prices being in the USD 80’s per gallon, while others claim they could make a case for methanol trading at USD 1.00 per gallon. If you were a trader playing the short side of the market for August, things are not going your way for the moment. Prices have steadily moved upward since the first of the month with trades transacting in the upper USD 90’s for August. The outer months of September and October, although backwardated to the prompt month, are not that much different than August. September and October trades have been done in the mid USD 90’s. One explanation for prices remaining at these levels could possibly lie with the upcoming maintenance outages in Trinidad and Equatorial Guinea. It is always possible these outages could extend beyond the scheduled start-up dates causing these producers to enter the spot market to cover losses in production; however November and December historically brings slower demand from consumers, and this could be the time the markets begin to see price declines.

Methanex increased their referenced contract index price by USD 0.03 per gallon to USD 1.08/gallon effective September 1st. Southern Chemical Corporation announced a rollover of their contract price, and will remain priced at USD 1.05/gallon for the month.

Methanol distribution markets are beginning to see an uptick in demand typical for this time of the year. Demand in the oil field sector is showing good signs of life, and surprisingly, the methanol demand in biodiesel is much improved going into the month of September. Distributor prices for August were in a range of USD 97 – 1.00 per gallon. The strength in the spot market for September and October could bring higher distributor prices for the month of September.

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