Oversupply of Methanol imports to India kill the market prices – 21 Mar 2014

Inventory built up of Methanol at Mumbai port dwindles the booking price, bulk price, ex-factory price (domestic players) and ultimately the barrel prices for the petrochemical in the Indian markets. In this review, the website provides a comprehensive picture of the price movement and the stock position this month for the petrochemical.

In the first week of March, the booking price for Methanol to Mumbai was $500 per metric tonne CFR. Thereafter the prices have continuously been falling from $480 per metric tonne CFR (last week) to current levels of $ 410 CFR per metric tonne, a decline of around 15% since the previous week.

A prominent importer told the website, "There is a huge demand-supply imbalance for Methanol in India, with the way things are going there is an expectation that the booking price for Methanol to India should decline by $50- 70 per metric tonne CFR in the near future".

Indianpetrochem foresaw this downward price trend in last weeks news story on Methanol (Read: Booking price for Methanol declines- will that impact prices?, published on 10th March, 2014)

According to Indianpetrochem sources in the Mumbai market, the average stock position for the petrochemical at Mumbai port this month has been greater than 30,000 metric tonne every day. On 12th March, 2014, Methanol stock at Mumbai port was around 36,000 metric tonne.

In line with this, its important to note that the cumulative demand in South India including Chennai, Mumbai and Bangalore is approximately 10,000 metric tonne per month, which is much more greater than the daily stock position for the chemical at Mumbai port.

As a consequence of this import trend, domestic players in the market have declined their ex- factory prices this month. RCF (Rashtria Chemicals and Fertilizers) did a downward price revision of its Ex- factory price for Methanol by Rs. 6 per kg to Rs. 29 per kg. Meanwhile, market participants speculate that GNFC, which revised its Ex- factory price from Rs. 37 per kg (exclusive of all taxes) to Rs. 35.5 per kg (exclusive of all taxes) on 8th March, 2014, would soon announce another downward price revision in the coming months.

At present, the bulk price for Methanol is Rs. 28 per kg (exclusive of all taxes, for imports) ex -Mumbai, last week this price was Rs. 34.5 per kg (exclusive of all taxes).

Methanol is a significant basic organic chemical with wide spread application in the chemical manufacturing industry. However, Methanol is mainly used to manufacture Formaldehyde, Acetic acid, Di-methyl terephthalate (DMT) and some solvent in India. As a consequence of this market trend, there is an expectation that prices for these chemicals will decline in the Indian market as well.

Demand for Methanol is strong in the Indian market, given the widespread application of the petrochemical. However, the over supply situation of imports in the market is negatively impacting the prices in the country. Going forward, there is an expectation that the prices will decline further in the near term as more import shipments hit the Indian shore.