Methanol price experience volatility due to interruptions in imports from Iran – 3 Jan 2014

This week the price of methanol spiked by Rs. 2 in New Delhi due to reduced imports from Iran, which is the main exporter of the chemical to India. This price shock was first felt in the Mumbai  during the last week of December, thereby, illustrating the ripple effect of prices from Mumbai to New Delhi. In addition to the supply constraints, demand for the petrochemical remained strong in New Delhi, this factor also supports the increase in price.

India is a net importer of methanol and market sources reveal that imports from Iran constitutes 70% of the total imports in India. As such, the domestic market is highly skewed towards the market dynamics in Tehran. A trader told Indianpetrochem, " The supplies have been constrained in the market as imports from Iran have been negligible during the holiday weekend  while the demand has remained strong; this increased the prices in Mumbai and Delhi". As Mumbai is the primary point of contact for delivery of Iranian imports, the price volatility in Methanol was felt immediately , whereby the prices moved to Rs. 42 per kg during the last week of December. However the prices have stabilized since the beginning of this week as exports from Iran have normalized, thereby the price have dropped by Rs. 2 this week  to Rs. 40 per kg in Mumbai.

As a consequence of the ripple effect in prices for New Delhi, there is an expectation that the prices should go down by the same level (as noted in Mumbai) in the capital by the end of next week.

Currently, methanol sells within the range of Rs. 57-58 per kg in Delhi.