During the week ending on May 23 the prices in the methanol market were up for both India and Europe speculatively, due to causes associated with shortages of supply, restocking, and changing demand.

In India, Methanol prices increased mainly due to restocking amid rising concerns of limited supplies from key exporting countries. Major Iranian producers, including Apadana Petrochemical and NPC-Zagros, initiated planned maintenance shutdowns, significantly tightening regional availability. Further compounding the issue, Middle East Kimiaye Pars Co. faced an unexpected technical outage at its 1.65 million metric ton per year methanol plant in Assaluyeh, adding further pressure to supply channels.

Domestically, the bump is traced to restocking in India as COVID-19 cases surged, leading to an urgent need for sourcing, especially in critical inputs. On the downstream side, where methanol derivative acetic acid is consumed, MCAA consumption increased after Grasim Industries restarted its East Coast operations, but demand remained unmoved for other derivatives like ethyl acetate and acetic anhydride, with many plants limiting run rates. In the PTA sector, demand weakened after maintenance, and methanol demand was moderate in the paint and coatings segment. Also, the bulk drug sector remained a bright spot, with increased production levels from key pharma manufacturers.

Methanol prices have risen in Europe, where distribution and supply logistical constraints in key markets such as the Netherlands, Germany, and France resulted from supply concerns. The cost increase was primarily driven by production issues with downstream effects. Global supply was hindered by delays at Methanex's new Geismar 3 plant in the United States, the startup delays for Petronas' new methanol plant in Malaysia, and production issues in Iran at multiple plants. Shrinkage and delays in refining capacity in Germany, as well as startup delays in Venezuela and New Zealand, were additional complications for global supply.

Further, the European methanol prices also rose because of logistical issues. Port congestion, labor strikes, and automation-related startup delays in Europe severely limited the efficient, timely distribution of methanol in key distribution locations. Furthermore, in Europe, the cost of many of the methane-producing feedstocks was rising as the price of upstream natural gas fluctuated due to geopolitical challenges and European energy supply strategies defined by the reduced reliance on energy imports from Russia.

Furthermore, the demand for low-carbon methanol from the maritime sector is increasing, which is adding pressure to conventional methanol supply chains, particularly given that e-methanol remains a very limited resource.

Overall, methanol prices in Europe and India increased significantly, taking supply chain inputs from the perspective of conventional supply chain constraints, logistical disadvantages, and emerging end-use demand. Market participants are now closely monitoring for further disruptions and potential price fluctuations in the Methanol market during the upcoming weeks.