Industry sources said on August 5 that methanol prices in Asia are likely to maintain their upward trend due to tight regional supply and force majeure of Kharg Petrochemicals (KPC)'s 660,000-ton/year facility in Iran.
After a fatal explosion at the central boiler of the KPC plant, the methanol plant was shut down on July 24th. Last week, KPC announced that it was forced into force and it was not available from August to September. The explosion killed four employees.
The company has notified the contract users of force majeure.
KPC's products are mainly sold in China, South Korea and Europe.
A distributor in Asia confirmed that it could not buy KPC's methanol. At present, it is enriched with other sources in the Middle East.
Due to the tightened sanctions against Iran, Iran’s limited supply, and the recent shutdown of some plants in Southeast Asia, Asian methanol supplies have been strained since mid-July.
Petronas, a state-owned petroleum company in Malaysia, announced on July 16 that the 2.36 million tons/year methanol plant in Labuan was subjected to force majeure. Due to mechanical failure. Kaltim, Indonesia, closed the 660,000-ton/year methanol plant in Bant on the same day.
Since mid-July, tight supplies have increased Asian methanol prices by US$5.00-15.00/tonne (3.80-11.40 EUR/tonne). Business people said that prices may rise further. On July 30, methanol was traded at US$250-255/tonne (China/Korea cost plus freight).
Traders and distributors react differently to the future of force majeure and methanol prices.
The impact of KPC's parking is not great, because the demand in August is not strong.
There is a large distributor in South Korea saying that in addition to the force majeure of KPC, there are other reasons for the price increase, because the company’s production capacity is small compared with other suppliers.
However, a distributor who does business in the Chinese market disagrees with this view. He believes that it has an impact on China's methanol spot sales.
Another major distributor in South Korea said that due to the decrease in other supplies and the suspension of production, the market supply has been tight and the cash supply has dried up, putting upward pressure on prices.
Many business people say that in the coming weeks, the impact is likely to become more pronounced.
Methanol is used in the production of formaldehyde, methyl tert-butyl ether, acetic acid, methyl methacrylate and other chemicals.
Other methanol producers in the Middle East include Saudi Basic Industries Corporation and Iranian National Petrochemical Corporation.