China methanol market after National Day holiday

Methanol price softened in most markets during China's National Day holiday in the beginning of Oct. By Oct 8, CFR China methanol price stabilized at $259/mt (equivalent to 2244yuan/mt), unchanged from Sep 30, CFR Southeast Asia price was steady at $326/mt, while FOB Rdam price dropped by 6 euros to 271 EUR/mt (equivalent to $315/mt), and FOB USG price fell by 4 cents to 97 cents/gal (equivalent to $323/mt).

On Oct 9, the first business day after the holiday, China methanol futures (Jan contract) on Zhengzhou Commodity Exchange lost 50yuan/mt to close at 2290yuan/mt, and spot price in Taicang market dropped in tandem by 25yuan/mt to 2215yuan/mt, mainly attributed to large imports and high inventory.

During the holiday, some China domestic methanol plants got restarted, with overall operating rate rebounding to 77%. However, a new round of plant turnarounds would begin in mid-Oct, and then the operating rate is anticipated to fall. But plant operations outside China were little changed.

After the holiday, China coastal methanol inventory increased by 16.5kt from Sep 25 to 1,571kt on Oct 9, with stable arriving of cargoes during the holiday.

In the first 8 days of Oct, shipments arriving at China's mainstream ports have exceeded 400,000 tons, and the full-month import volume is projected to maintain about 1.5 million tons in Oct.

It is noteworthy that Iranian-origin cargoes has already reached 320,000 tons, and later gas restrictions should be watched closely. It is currently estimated the import volume in Nov could be 1.2~1.5 million tons.

In the near future, China methanol supply and demand structure is good in interior regions. But in coastal market, arriving of imports from Iran is fast and non-Iranian cargoes are expected to sustain high. Spot price is under strains from severe oversupply combined with high inventory. In the medium run, with the upcoming gas restrictions in Iran and the trial run of Levima's new MTO unit, methanol price could get supported.