Heavy rain in Henan has little impact on methanol

Heavy rain sweeps Henan Province in Central China recently, and the government has activates the second-level emergence response to combat the rains. Road and railways in some cities in Henan have got flooded.

In Henan, there’s methanol capacity of 4.19 million mt/yr, accounting for about 4% of the total in China. The average operating rate methanol plant in Henan was at around 54%. Currently, the plant operations are little impacted by the heavy rains, and the operating rate is little changed.

However, due to the heavy rains, several expressways in Henan were shut, and hence, the route from Jincheng City of Shanxi Province to Luoyang City of Henan Province and the route from Henan to Jiangsu Province were blocked. Some producers in Henan says that there’s still storage space and the plants are free from inventory pressure.

The spread of methanol prices in Jiangsu and Henan has been at around 270-330yuan/mt since the beginning of July. The freight from Hebi, Henan to Changzhou, Taicang is around 200-210yuan/mt. Therefore, there’s still profit of about 40-70yuan/mt with other cost taken into consideration.

In a conclusion, the heavy rains in Henan has little impact on methanol market. Inventory is not high in Henan and local price could keep strong on firm cost.