Member ID:
Stay logged in for 30 days
Forget Your Password?

login CCFGroup App

Insight | Time:Feb 10 2018 2:54PM
Some perspectives on methanol market after Spring Festival
Text size
1. The restart of gas-based methanol plants
The operating rate of coke-oven gas-based methanol plants had been reined in by environmental protection since the last quarter of 2017. In addition, some natural gas-based methanol facilities were shut down due to the lack of feedstock in the end of 2017 as natural gas was diverted to residential heating. As of Feb 7, the average operating rate of those methanol plants fed by coke-oven gas had dropped to 52.96%, and that of plants fed by natural gas to 16.52%.

As the heating season is about to end, demand for natural gas in residential application will reduce notably. Currently, methanol plants with natural gas as feedstock can make good profits, therefore, some plants are very likely to restart after Spring Festival holiday. The heating season is primarily expected to end on Mar 15, and the restrictions on coke-oven gas-based methanol production may get lifted.

2. Spring turnaround season
Spring Festival comes later this year than in previous years, after which there will be the spring turnaround season for China’s domestic methanol plants. It typically begins in March, and April will see most heavy plant maintenance. In 2017, for example, methanol plant operating rate dropped in that period, with some major plants under maintenance, including Jinchengtai, Yigao Sanwei, Rongxin, Xinneng Phoenix, etc. Currently, Jiutai Energy and Hebei Coal Industry have announced their maintenance plan in spring turnaround season.

3. Producers’ need to reduce inventory versus end-users’ demand for feedstock
Methanol plants will keeping running during the holiday, while cars for logistics will not be available. Therefore, product inventory is expected to increase after the holiday, and some producers will be urgent to reduce stocks. On the other side, downstream demand (formaldehyde industry for example) could recover after the holiday. Currently, downstream plants are reluctant to stash feedstock methanol, who will increase the procurement after the holiday to ramp up production. In addition, the profits of methanol-to-olefins are improving now, and demand for methanol in MTO sector will get boosted.

4. Imports remain relatively low in short term
Restricted by the Spring Festival holiday, China’s methanol imports in Feb will stay at low level. In 2018, global methanol capacity is expected to grow by 5.9 million mt/yr, but most of the new capacity would not come on line in the first quarter.

In a conclusion, domestic methanol production may increase with gas-fed plants restarting, but supply increase will be subdued by plant turnarounds combined with low imports. Meanwhile, downstream plants are getting active as profits are improving, which will boost the demand for feedstock methanol. Therefore, the current downward pressure on methanol market could get alleviated.
Related Articles
Methanol market weekly (Feb 5-9, 2018)
ZCE methanol futures for May delivery close 0.36% lower
Methanol cargo arrivals to East China ports (Feb 12-19, 2018)
Methanol market weakens slightly
ZCE methanol futures for May delivery open 1 lower
Methanol market daily (Feb 8, 2018)
Methanol tank inventory in South China main ports (Feb 8, 2018)
Methanol tank inventory in East China main ports (Feb 8, 2018)
ZCE methanol futures for May delivery close 0.96% lower
Methanol market fluctuates correctively
Development of nylon 6 flat filament market
China's coal-based MEG market in 2017
Brief introduction of VSF overseas markets

浙公网安备 33010902000742号