CFR China and CFR SE Asia methanol prices continue rising

In the week from Sep 7 to Sep 13, methanol cargoes arriving at China coastal regions reached 370kt, new high on weekly basis since Jul. As a result, China coastal tank inventory of methanol increased sharply by 110kt in the week ending Sep 14, to reach this year's new high. Coastal methanol price has risen from 2,100yuan/mt in end-Jun to 2,500yuan/mt in end-Aug, but then turned to consolidation, as China Sep methanol imports are estimated to be large at around 1.3~1.35 million tons, inland methanol market has shown weakness with product inventory at methanol plants increasing in Northwest China.

Though domestic yuan methanol lacks advancing momentum, USD methanol prices continue rising. The rise in CFR Southeast Asia methanol price is most notable, with its spread to CFR China price widening to $51.5/mt, but it is still in the normal range.

There are three methanol plants with combined capacity of 3.91 million mt/yr in Southeast Asia. Currently, with frequent disruptions, Malaysia's Petronas and Brunei's BMC were under shutdown with combined capacity of 3.21 million mt/yr. Therefore, methanol prices in Southeast Asia are firm, and may further move up, which could attract inflows of materials, and thus non-Iranian origin goods to China could reduce.

In Europe and US, FOB Rdam and FOB USG methanol prices have dropped below CFR China price since Jun 2023. It is quite different from the usual case, as FOB Rdam and FOB USG prices were normally higher than CFR China price for much of the period.

US methanol market is relatively weak, and therefore, there have been 32kt of methanol cargoes from US arriving at China in Sep. Discussion for US goods is still heard recently, and it could be a normal state in the fourth quarter. US Natgasoline's 1.75 million mt/yr methanol plant was shut unexpectedly on Sep 8, and the price has rebounded due to reduction of supply.

In Middle East, methanol plants in Iran are running stably. According to CCFGroup's investigation, as of Sep 13, international methanol plants operating rate averaged 63.86%, and the operating rate in Iran hit this year's high of 72%. Estimated based on historical data, plant operating rate in Iran typically drops in Nov and Dec and reaches the low point in Jan due to gas restrictions in winter. Shipments from Iran in Dec and Jan are quite low, and plant operations in the fourth quarter should be watched closely.