Focus of methanol market remains on supply and demand

1. Zhejiang Xingxing's MTO plant

Zhejiang Xingxing had shut its 600kt/yr MTO plant on Jun 19, and the restart is undecided despite the rumors in the market. Estimated based on the shipment of methanol cargoes arriving at Jiaxing Zhapu Port, Zhejiang Xingxing which is located at Zhapu, has no reserve of feedstock methanol for the MTO plant. Therefore, the plant is unlikely to restart in Jul. The cargo arrivals and reserve of methanol goods in Aug should be watched closely.

2. Supply recovery from domestic plants

In the week ending Jul 21, Shaanxi Jingyi's 260kt/yr methanol plant based on coal got restarted, and Inner Mongolia Yigao Sanwei's 300kt/yr methanol plant fed by coal was also restarting. Furthermore, some plants in Northwest China, such as Inner Mongolia Guotai, ENN Energy, Henan Xinlianxin and Henan Zhongxin are poised to restart, as the profit of methanol production is improving. The average operating rate of domestic methanol plants had dropped to low, and the inflection point may have come. China domestic methanol supply is expected to increase. Looking forward, Shanxi Gengyang's new 300kt/yr plant and Longxingtai's new 300kt/yr are started successfully. Hulu Hengsheng's new 800kt/yr plant and Guangju New Material's fresh 600kt/yr plant are slated to start in Aug.

3. Feedstock coal

Coal price moves up due to safety inspections, and the expectation of peak demand season in summer. Coal inventory will inevitably reduce amid the upcoming fast consumption. On supply front, there could be some disruption due to safety inspections, which would affect market sentiment as well as coal price. Then, any regulations on coal should be noted.

4. Methanol shipments from US to China

There's talking that US Koch would well 110kt of methanol to China. The first shipment is 40,000 tons, which would be loaded in early Aug to the ship named NCC Najem; the other shipment is 70,000 tons, will be carried by the ship TRF Mongstad, and the goods will be loaded in end-Jul; while the ship is unknown for now. Even if it is reliable, the ships would not arrive until end-Aug or early Sep. As of Jul 20, CFR China methanol price was $255/mt, and FOB USG price at $223/mt, and given the freight and tariff, exporting methanol from US to China does not have advantage. In addition, it will cost $25/mt more than the freight to Europe.