Inland methanol advances with spring turnarounds ongoing

Apr-May is typically the spring turnaround season for methanol plants in China. In Apr 2019, several plants in Northwest China were shut intensively, but the duration was short and plants got restarted soon with operating rate rebounding. In 2020, some methanol and downstream plants were affected by the pandemic in Jan-Feb, but then operations recovered in Mar. The spring turnaround season began in Apr, and plant restarts were postponed due to poor economics in May-Jun. In addition, plant operating rate was also dragged down due to unexpected shutdowns. In 2021, several methanol plants started spring turnarounds earlier in Mar, due to dual controls on energy consumption and intensity. Then, the operating rate recovered gradually in Apr.

In 2022, several domestic methanol plants in China have announced periodical shutdown maintenance plans in spring turnaround season. As of Mar 22, the capacity of domestic methanol plants with maintenance in spring is expected to reach 6.95 million mt/yr in Mar (1.55 million mt/yr already under maintenance), 7% of total capacity in China. It is estimated up to date at 4.35 million mt/yr in Apr, 4-5% of total; and 6.25 million mt/yr in May-Jun, 6% of total.

China methanol plant maintenance in spring turnaround season (Mar 22 updated)

Based on the maintenance schedules, the turnaround season is expected to last longer this year. In addition, the government of Jincheng City, Shanxi Province held a meeting recently on environmental protection issues. Local methanol plants are required to shut, with combined capacity of 650kt/yr, and the restart date is undecided.

As of Mar 23, the average operating rate of China domestic methanol plants is estimated at around 72.79%. (The operating rate is calculated based on total methanol capacity of 98.175 million mt/yr as of Mar 2022).

Inventory in days = inventory in tons / capacity

In terms of product inventory in methanol plants in Northwest China, it decreased fast in late Feb. Firstly, inventory increase after the spring festival in early Feb was smaller compared to previous years. Secondly, traders stocked up speculatively as petrochemical products were driven up by the spikes in crude oil and coal. As a result, the inventory in most Northwest China methanol plants is currently at relatively low levels. When the restocking increases, suppliers would cease offers, reflecting relieved selling pressure.

Looking forward, traders’ sentiment is mixed. Though the spring turnaround season has begun, the average operating rate of domestic methanol plants hovers relatively high compared to previous years. Therefore, it is difficult for the inventory to further reduce in spite of the supply reduction. Meanwhile, with the sharp rise in methanol prices this week, some maintenance could get postponed or some plants could get restarted earlier than scheduled. Therefore, methanol price is expected to correct in inland China, and the focus is laid on the progress of maintenance, downstream plant operations as well as the pandemic situation.