How will Panama Canal congestion affect China methanol imports

The water shortage and drought conditions have led to growing congestion at Panama Canal, with a surge in the number of ships waiting to transit.

A recent auction at the Panama Canal saw a shipper pay a record-high nearly $4 million to expedite its crossing. As reported by Bloomberg, Japan's Eneos Group spent $3.98 million in a November 8 auction to secure a crossing at the congested Panama Canal.

Then, how will the congestion at Panama Canal affect China's importing of methanol?

According to China customs data, in Jan-Sep 2023, China has imported 10.567 million tons of methanol, with non-Iranian origin goods accounting for nearly half of the total amount.

Due to the startups of new large-sized methanol plants in the US in recent years, US has turned from an importer of methanol to an exporter, and some materials from South America are thus diverted to Chinese market. Therefore, China has seen South America becoming a major origin of its methanol imports in recent years. In the first 9 months of 2023, South America has taken up 16% of China's methanol imports.

In terms of the cargo arrivals to China in Nov, the month-to-date volume has reached 1.23 million tons in Nov, with South America accounting for 250kt or 20%. Half of the ships that carrying methanol cargoes from South America will be waiting at Panama Canal, while the other half will take the route and round Cape of Good Hope. It will both take about one and a half month for the ships to arrive.

Ships arriving at China in Nov from South America

With the growing congestion, the time for shipping will be longer. The imported cargoes that China receives in Nov may not be affected as the cargoes are loaded earlier in Sep or Oct. However, cargoes to China from South America which could arrive in Dec or Jan may reduce.