Methanol market in the lack of bullish momentum

China methanol supply is anticipated to recover. With some domestic plants, such as Shanxi Lubao, to restart, overall plant operating rate is expected to rebound to 74% in the week ending Aug 20.

Outside China, Bushehr's 1.65 mln mt/yr methanol plant in Iran remains under shutdown, while other Iranian plants are mostly running stably. The loading of shipments from Iran has accelerated recently, amounting to 700kt in the first half of Aug, which are bound to arrive at China in Sep. But the loading of cargoes in the latter half month is expected to slow down. The volume of non-Iranian shipments remains high, and therefore, China coastal methanol market is under great pressure from intensive cargo arrivals.

On demand front, most traditional downstream sectors are running with stable demand for methanol. Acetic acid plant operating rate rallies slightly, while DMF operating rate drops. As for MTOs, the demand for methanol is expected to pick up. Except for Zhejiang Xingxing's MTO unit which is shut, most units are running stably and Sinopec Zhongyuan's MTO unit is poised to restart this week.

Methanol futures on Zhengzhou Commodity Exchange have plunged recently, as macro economic sentiment has softened, and the spot price is also weighed lower by increasing inventory at coastal regions. Methanol market lacks of bullish momentum in the near term.