A tightening in global methanol supply has strengthened pricing and contributed to a stronger outlook for the market after a soft close to the previous year, methanol producer OCI Partners said Monday.
The company expects higher realized pricing throughout the first quarter after “robust increases” in contract and spot pricing, the company said in a conference call to discuss fourth-quarter results.
“Methanol prices are currently benefiting from reduced supply globally and healthy demand,” CEO Frank Bakker said. “Recently, various plant outages around the world and continued natural gas curtailments in Trinidad have tightened global inventories.”
Trinidad and Tobago has a methanol capacity of 6.62 million, but producers there have encountered natural gas curtailments in recent years.
A pair of plants in the country have been idled due to the natural gas shortages as curtailments remain around 25%, sources said.
The situation with natural gas supply in Trinidad and Tobago does not appear likely to be resolved in the near term considering the idling of the two plants and the dismissal of staff, Bakker said.
The startup of two methanol-to-olefins units in China boosted demand toward the end of last year, with an additional MTO startup in the country still expected for 2017, the company said.
OCI Partners’ volume-weighted average price came to $257/mt in Q4, down from $282/mt in Q4 2015, and to $213/mt in 2016, down from $325/mt.
Weighted average methanol contract prices have increased to $491/mt in March, the company said.
OCI Partners’ 912,500 mt/year methanol plant in Beaumont, Texas, operated at at rate of 88% in the fourth quarter, down from 92% from the fourth quarter of 2015, the company said. The lower run rate owed to a power outage and work to replace a steam turbine bearing.
The methanol plant’s utilization rate equaled 90% from 2016, down from 94% in 2015.
Total methanol output reached 203,000 mt in Q4, down from 211,000 mt in Q4 2015, and totaled 823,000 mt in 2016, up from 652,000 mt in 2015.
US spot methanol pricing averaged 91.88 cents/gal FOB USG in Q4, up from 78.34 cents/gal FOB USG in Q4 2015, according to S&P Global Platts data.
–Justin Schneewind, firstname.lastname@example.org
–Edited by Richard Rubin, email@example.com