Methanol prices go up

Experts note a sharp increase in prices at the methanol market in Q4. The market is recovering from a prolonged decline in late 2019 - Q1-3 of 2020.

Export prices for Russian methanol were falling for two years in a row. In 2019, prices decreased by an average of 43%. As of September 2020, foreign trade prices for domestic methanol averaged $169 per ton, while prices have fallen by 11% since the beginning of the year, according to the "KhimOnline" news agency.

"At the beginning of the year, methanol prices were under serious pressure from the unpredictability of the global economy. The Q2 was especially difficult, when the markets simply stopped due to the unpredictability of the lockdown consequences", - comments Oleg Mamaev, General Director of "Metafrax Trading". "During this period, there were processes that can be equated with force majeure on a global scale: buyers refused to fulfill signed contracts, manufacturers were on the verge of shutdown."

According to Oleg Mamaev, the daily monitoring and analysis of markets by "Metafrax Group" specialists made it possible to make timely decisions aimed at maintaining the company's position in the market and fulfilling the approved budget parameters: "The timely redistribution of commodity flows allowed to not only sell our own methanol, but also the products of other manufacturers."

Market Pulse

"During Q3, players managed to feel the pulse of the market. There was a stagnation of the main macroeconomic indicators and the players sobered up. The market recouped the drop in demand of Q2 and returned to the initial parameters of the beginning of 2020", - said Oleg Mamaev. The contract quote of ISIC fob Rott was 263 euros, while at the beginning of January it amounted to 270 euros.

According to the Federal Customs Service, per results of 9 months of 2020, about 1 662 thousand tons of methanol were shipped from Russia to global markets in total. The level of supply of methyl alcohol for the period from January to September of 2020 has increased by more than 4% compared to the same period of the previous year, as reported by "KhimOnline".

The share of export supplies of methanol was almost 43% of its total production level in the country, according to the latest data. The main shipments of methanol are made to the markets of foreign countries.

The sharp increase

In Q4, the market situation changed significantly and prices went up sharply. The cost of methanol momentarily increased to 340 euros per ton.

According to Oleg Mamaev, the planned growth of the markets was disrupted by a number of political and economic events: "Of course, the tone of occurrences was set by the US presidential election. Its unpredictability sometimes put the market in a "deadlock". Spot quotes of methanol significantly exceeded the contract ones. The domestic market was disrupted after the shutdown of a large domestic producer of methanol – "Tomet". The ongoing corporate conflict between the owners of this enterprise affected the surge in prices.

Under these conditions, "Metafrax", as a market maker of the Russian and European methanol market, removed a significant part of the export volumes and directed them to the domestic market. Almost 50 thousand tons were shipped to Russian customers."

Experts predict that by the end of the year, the price of methanol will be in the range from 350 to 380 euros per ton.