Big events on China methanol industry in 2020

China methanol markets rebounded after sharp slump in 2020. In the first half year, the outbreak of COVID-19 pandemic ripped through the economy and industry, sending crude oil nose-diving. China methanol prices plunged as well, to 1,500yuan/mt in Taicang, and 1,300yuan/mt in Inner Mongolia in Jun, recording new lows in a decade, leaving domestic methanol producers under losses. In the third quarter, the supply glut was relieved with demand picking up, driving up prices. In the fourth quarter, the increase accelerated, with methanol price rising to 2,550yuan/mt in Taicang and 2,085yuan/mt in Inner Mongolia in Dec.

Big events on methanol in 2020
I. Macro economy
1. China locked down Wuhan City on Jan 23, and triggered first level emergency response in 30 provinces and municipalities on Jan 25. Domestic logistics and travelling were restricted strictly. In Mar, the pandemic was largely stemmed, and the lockdowns and restrictions were eased.

2. The pandemic outside China swept the world. Several countries implemented lockdowns to curb the pandemic. The lockdowns were eased in May or Jun.
3. Global economy stalled and demand for crude oil evaporated in Jan-May due to the rampant pandemic. OPEC+ failed to clinch production cuts deal. Global crude oil storage space dwindled and the price tumbled.

II. China’s policy
1. On Oct 27, Jincheng City of Shanxi Province initiated some regulations and measures, requiring local coal chemical plants to cut production by 30%. Methanol capacity totaling 2 million mt/yr was impacted.

2. In Apr, Henan Province put forward Standard System for the Elimination of Outdated Capacity, requiring companies to complete the renovation on fixed bed gasification for methanol by the end of 2020. Methanol capacity amounting 750kt/yr was affected.

3. On Dec 12, the National Development Reform and Commission and 10 power operators held a meeting. NDRC requested power companies to cap the buying price of coal amid a surge in the cost of the fuel. The cap was set at 640 yuan ($98) per ton.

III. Plant operations
1. Ningxia Baofeng’s second 2.2 million mt/yr methanol plant started production in May.
2. Three companies (Jinmei Zhongneng, Shanxi Jingyi, Xinjiang Tianye) started new small and medium sized plants with combined methanol capacity of 1.21 million mt/yr in Jun-Aug.
3. Henan Xinlianxin and Shandong Wanhua each started a 600kt/yr new plant fed by coal in Sep-Nov.
4. On Dec 18, Shenhua Yulin’s new 1.8 million mt/yr methanol plant started and is expected to get on-spec product in end-Dec.
5. Yanchang Petroleum and China Coal gets on-spec product from its new 1.8 million mt/yr methanol plant on Dec 28. Its downstream 600kt/yr MTO plant has achieved on-spec ethylene and propylene on Dec 10.
6. Jilin Connell started its new 300kt/yr MTO plant in Apr.
7. Jiangsu Sailboat shut its 800kt/yr MTO plant on Dec 2 for 36-day maintenance.
8. Methanol plants affected by natural gas restrictions in winter

IV. Imports and inventory
1. Iran’s Busher started its new 1.65 million mt/yr methanol plant in May.
2. Iran’s Kimiaya started its new 1.65 million mt/yr methanol plant in Jun.
3. Several Iranian methanol plants shut due to gas restrictions in winter starting from Dec, and some plants have scheduled maintenance in Q1 2021.
4. China’s methanol imports surged in the third quarter. The imports reached 1.36 million tons in Jul, hitting record high.
5. China coastal methanol inventory continued rising, to 1.258 million tons as of end-Jul.
6. Liquid chemical inventory rose sharply in May-Jun, leading to shortage of tank storage space. Several storage reserves raised storage fees.