US methanol contract prices are expected to drop for a fourth consecutive month in July as spot prices have remained stable near the lowest levels in nearly two years, sources said Tuesday.
July contract announcements from Southern Chemical Corp. and Methanex are expected to be 10-15 cents/gal lower than June's posted prices, sources say. Spot prices have remained weak due to large volumes of Southeast Asian imports that arrived in the US in March, April and May.
Spot prices were assessed Tuesday at $1.095/gal FOB USG. Methanex's June contract price was 160 cents/gal FOB USG, with SCC at 150 cents/gal FOB USG.
If the contract prices fall, it will be the fourth straight month in which both companies have cut their prices. Methanex has cut its price by 10 cents for each of April, May and June as a result of the lower spot prices. SCC cut its prices by 10 cents for April and May and by 20 cents for June due to the lower prices.
"I think they will come off 10-15 [cents] this month and 10-15 [cents] next month," said one source, adding that it will allow producers to gradually drop their prices.
"I think [SCC and Methanex] need to come down 15 [cents], but it's a tricky situation, and it depends on who posts first," said a second source.
Spot prices have declined 56 cents, or 33.8%, since the beginning of March, according to Platts data.
The market has been described as oversupplied in recent months due to the large import volumes. The imports resulted in full inventories and supply length in the US market, sources said.
