Indian methanol importers are wary of a possible spike in prices of Iranian material with the lifting of some international sanctions starting 20 January, market sources said on Monday.
On Sunday, Iran reached an agreement with six world powers that the six-month interim nuclear accord reached in November 2013 will be implemented this month.
The deal will effectively curb Iran’s uranium-enriching activities in exchange for relief from international sanctions imposed on the Middle Eastern country. Sanctions were imposed on Iran on suspicions that it is developing nuclear weapons.
The lifting of some sanctions will likely open up more export markets for Iranian petrochemicals, including methanol.
Iranian methanol may flow to other countries in Asia, particularly in the southeastern region where supply is currently tight, Indian players said.
“If the [methanol] plants in Southeast Asia remain shut and demand increases in China after the Lunar New Year, India might see price increases [for Iranian methanol],” an Indian importer said.
Import prices in India have been on the uptrend in recent months on the back of tighter supply. On 10 January the import price to India was at $540-570/tonne CFR (cost and freight) India.
“Right now the situation is not clear as several Iranian plants are shut or on reduced output because of feedstock gas shortages in the region, but we will be following the situation closely,” the importer said.
The nuclear deal that Iran struck with major world powers in November last year raised hopes among the methanol producers in the country that it will allow them to diversify their supply chain and offer material to more countries in Europe, as well as in other parts of Asia.
Buyers in countries such as Taiwan or South Korea were optimistic that increased availability of methanol, with supply coming from Iran, would lead to lower prices in northeast Asia.
On 10 January, import prices in northeast Asia were at $530-560/tonne CFR Korea, $510-530/tonne CFR Taiwan, $430-520/tonne CFR China.