EU ban on Russian methanol imports delayed to allow for supply diversification

A multi-month delay on banning Russian methanol imports into the EU is intended to allow member states to find alternative sources of supply, the European Commission said Jan. 25.

The EU's ban on methanol imports from Russia will not become effective until June 18. It was announced in October as part of the eighth package of EU economic sanctions against Russia and had originally been due to come into force early in January.

The ban comes amid a raft of international sanctions against Russia, in retaliation for its invasion of Ukraine in February.

The full phase-in of the ban was extended for a longer period than the initial one of three months and will last eight months instead, a European Commission spokesperson said.

"The reason for that was the necessity to have more time for some industries in some EU member states to conclude contracts to diversify their supply," the spokesperson said.

The extension and eventual ban apply to methanol imported into the EU from Russia under contracts concluded before Oct. 7 last year. Chemical Week, part of S&P Global Commodity Insights, understands that they do not apply to additional volumes or spot material.

The extension appeared in the EU Official Journal Dec. 16 following a decision adopted by the EU Council. The journal did not state a reason for the extension.

It comes as the market braces for a turnaround at Equinor's 900,000 mt methanol unit at Tjeldbergodden, Norway, in early February and a price rally. Spot methanol prices have been on an upward trajectory since Jan. 13 and only ticked down Jan. 24.

Platts, part of S&P Global, assessed the FOB Rotterdam five-to-30-day methanol spot price at Eur344/mt ($374/mt) Jan. 25, down Eur1.75/mt from a day earlier but up 13.7% from Eur302.50/mt Jan. 12.

"[It will be] interesting to see if we touch the Eur350/mt level by the end of the week. [We] still see buying interest until April," a trader said.

For now, Russian methanol imports remain buoyant. The EU imported 98,200 mt in October, according to the latest available data from Eurostat, which was 8,300 mt higher than volumes seen in October 2021. Volumes typically fluctuate between 90,000 to 130,000 mt and remained within this range for the first ten months of 2022.

Spot trading has remained liquid with at least 42,000 mt heard agreed for the eight trading days leading up to Jan. 24.

Equinor's volumes used to be replaced by Russian volumes in the past, sources said.