US methanol market observing oil markets, Chinese methanol-to-olefins units in Q4

28-Sep-15

The US methanol market will observe changes in oil markets and demand from Chinese methanol-to-olefins units in Q4-2015 that will also feature the start up of a US plant, as per market sources in Platts. The market is expected to be mostly quiet during Q4 with tepid demand. Spot pricing will likely remain in the 80s-90s cents/gal for the rest of the year, several market sources said. "We're not expecting prices to dip below where they were in September," a producer source said of spot pricing that fell as low as 80 cents/gal FOB USG. A market source expected spot pricing to rise throughout the quarter based on a recent firming in the US and European markets, but a trading source said his outlook has been more pessimistic than most based on the weakness in demand that has been seen lately. Weak spot pricing in China has continued to impact the US market, with the market in China lower on recent economic weakness, a softer energy complex and less demand, particularly from methanol-to-olefins units. Lower crude pricing, and specifically lower naphtha pricing, reduces the attractiveness of producing olefins through MTO units. The weakness in the markets there have also impacted the prices of products downstream of MTO units. US methanol may also see less demand during the winter from downhole oil and gas uses, market sources said. A 1.3 mln/mt year facility, a joint venture between Celanese and Mitsui, has been expected to start up in the fourth quarter. Market sources have expected the Clear Lake, Texas, facility to start up on October 1, and a Celanese spokesman said Friday that the unit should be operational by then. Additionally, Methanex has hoped to begin operations at the 1 mln mt/year Geismar II facility in Geismar, Louisiana, by the end of the year, the company has said.