China methanol prices have been relatively stable at around $380/mt despite a recent spate of prompt deals done at lower prices and high inventory levels, as traders keep an eye on Iran, said market sources Wednesday.
On Monday, a 10,000 mt methanol cargo CFR East China was heard to have traded at $370/mt. On Tuesday, a 5,000 mt cargo was heard done at $372/mt.
While the trades were for prompt cargoes that a trader described as "distressed," buyers emboldened by the deals have reduced their bid levels, from $375/mt on Monday to $370-375/mt Wednesday. However, few sellers were willing to offer lower, and offers are at $380-385/mt. On Wednesday, a Japanese trader was heard to be in the midst of a negotiation for a CFR East China parcel, at $380-381/mt levels.
These prices were partly supported by the domestic market, which has been stable despite falling futures prices on the Zhengzhou Commodity Exchange.
"They are gambling that the Iran situation will get more serious," said a trader based in China.
A trader based in Singapore agreed that this was possible.
"No one knows what will happen come May 1. So ... there is no reason to dump material into the market now. At most dump it one month later," said the trader.
As part of ongoing sanctions against Iran, it will be illegal for EU insurers to insure Iranian petrochemical shipments to non-EU countries after May 1.
A source at an Iranian producer said the plant had yet to find a vessel for its May shipment.
Sellers were also wary selling cheaper a product they had earlier bought at higher prices.
"They don't want to take loss on what they have imported," said a Middle East-based trader.
"Most domestic product owners bought at a higher cost. So they're reluctant to sell low," said a trader based in China.
Meanwhile, strong supply volumes and a weak downstream has resulted in a buildup of methanol inventory in east and south China. The inventory level in East China was heard at 600,000 mt, 100,000 mt higher than typical levels.
In South China, the inventory level is understood to be above 200,000 mt. Typical levels are around 200,000 mt.
A China-based trader said he was still unable to find tank space for 10,000 mt of his 50,000 mt cargo arriving end March in South China. An Iran-origin methanol cargo for end March delivery was also diverted from South China to East China due to a lack of storage space.
