Available vessel space has tightened significantly along the transatlantic eastbound route in recent weeks because of a surge in methanol exports from the US to Asia, according to sources. “The transatlantic eastbound route is tight for March loading – we’re full. Methanol is taking away a lot of space – in some sense it has been the driver of tight conditions,” one ship operator said.

“Methanol is moving from the US Gulf to the Far East in big slugs – it takes up whole tankers in 40,000 tonne lots,” one ship broker said.

“People are fixing methanol now even for April positions – they’re booking forward,” the source added.

The effects of tight vessel space were also being felt in the European acrylonitrile (ACN) market where spot prices were under pressure due issues finding open vessel space along the route.

Freight rates to move 2,000 tonnes of easy chemicals from the US Gulf coast to Rotterdam remain firm at levels of $80-85/tonne, while rates to move 5,000 tonnes of easy chemicals along this route are being maintained at $60-65/tonne, amid tight vessel supply.

Methanol is moving from the US to Asia as firmer prices are achievable there, making an arbitrage workable and taking vessels out of the transatlantic eastbound route. This arbitrage is a new thing but thought likely to become a normal trade flow.

Last week a fixture to move 32,000 tonnes of methanol from the US Gulf coast to China for loading in the second half of February was noted, with freight rates in the mid $60s/tonne.

In addition to a workable arbitrage, the US methanol market is currently seeing healthy supply amid increased production capacity, with mothballed plants being restarted and new plants being built as a result of producers having good access to cheap shale gas.

However, Asia is not the only region being impacted by the oversupply in the US, with volumes heading along the transatlantic eastbound route.

The European methanol market is now experiencing lengthy supply and prices have been under pressure in recent weeks as a result, with exports of methanol from Europe to Asia also occurring.

There is an enquiry to move 40,000 tonnes of methanol from Finland to China for April dates being touted in the shipping market but one source said fixing the enquiry would require a lot of attention and there was no evidence of it being fixed as yet.

A fixture to move 40,000 tonnes of methanol from Europe to China for 15-25 March dates has been noted in recent weeks, at a freight rate of $2m (lump sum).
Source: ICIS