China methanol seen stable-to-soft amid higher domestic supply

SINGAPORE (ICIS)–Import prices of methanol in China will likely be stable-to-soft in the coming weeks, with downward pressure stemming from increased supply as domestic plants complete turnarounds.

On 28 April, methanol prices were assessed largely stable week on week at an average of $279/tonne CFR (cost and freight) China, but were down by 26% from late February, according to ICIS data.

China is a net importer of methanol. But most Chinese buyers have not been aggressive in import negotiations amid a lack of any urgent requirements and no clear picture on price direction, a trader said.

Prices got a reprieve last week partly on reports that Jiangsu Sailboat’s methanol-to-olefins (MTO) plant in eastern China has started up, market sources said.

The MTO plant is currently operating at 80% of capacity after operations began at around 27 April, after some delays.

The start-up would mean increased demand as the MTO plant is expected to consume 2.4m tonnes/year of methanol. But any market impact is likely to be delayed as the company had built up inventory since December last year, in anticipation of the plant’s start-up in January this year, industry sources said.

Jiangsu Sailboat is not likely to purchase any methanol for up to two months, according to a company source.

Meanwhile, supply in China is expected to be higher in May compared with April as coal-based methanol plants have completed turnarounds at their plants, while demand is expected to be largely stable.

Source: China editorial team at ICIS

In other Asian markets, methanol prices have also largely been on a downtrend since end-February amid ample supply.

In the South Korean market, methanol import prices in end-April fell by $8/tonne week on week to an average of $307/tonne CFR, down by around 23% from early March, according to ICIS data.

Prices in this market are normally $20-30/tonne higher compared with China’s, but the gap recently widened as Chinese prices declined at a faster rate.

Based on the 28 April assessments, the price gap was back within the typical range at $28/tonne, after rising to $35/tonne in the previous week, ICIS data showed.

A few market participants were also uncertain of the representative market level in South Korea this week due to limited new spot discussions in the key Chinese market.

In Taiwan, importers largely stayed on the sidelines, prompting sellers to divert cargoes to other markets in Asia in search for better netbacks. Domestic Taiwanese prices were heard stable, with the US dollar equivalent at $290-300/tonne.

In southeast Asia, discussions were thin as most buyers have sufficient inventories from contractual volumes, while consumption at other countries in the region is expected to decline in June, when the month-long Muslim fasting month of Ramadan starts.

Selling indications last week at $310-315/tonne CFR SE (southeast) Asia failed to generate any buying interest.

In India, domestic methanol ex-tank prices were on a softening trend throughout last week, taking the cue from the key Chinese market.

Buyers expect a further softening of domestic methanol prices amid ample supply, while on the import front, market players await the closing of May tenders for Iranian products by early next week.

Focus article by Kite Chong

Additional reporting by Yvonne Shi and Sam Liang

Picture (top): A bottle of methanol. (Source: VISUM/REX/Shutterstock)