Methanol supply and demand impacted by COVID pandemic

China domestic methanol market has been moving downward since end-Mar, as demand and logistics were hit by the spread of covid pandemic, and the progress of plant maintenance in spring turnaround season was slower than expected.

With the pandemic spreading since early Mar, logistics in Henan, Shandong and Hebei are affected with trans-province transportation slowing down or even shut. It is frequently heard that the delivery of products is hindered. In addition, the pandemic deals a blow to some downstream sectors such as formaldehyde and MTBE, leading to decline in plant operating rates.

The average operating rate of formaldehyde plants in China reached 38% in early Mar, hitting several years’ high, with resumption of production and startup of Shandong Lianyi’s 1.2 million mt/yr formaldehyde plant in end-2021. Afterwards, however, with restricted logistics and weakening end-use demand, plant operating rate declined continuously.

On supply side, the spring turnaround season is also delayed due to the pandemic. In Mar, China domestic methanol plants with combined capacity of 2.35 million mt/yr underwent maintenance, much less than earlier expected, while 100kt/yr capacity restarted. Several plants postponed the maintenance due to restricted personnel and equipment available for plant maintenance with the spread of covid-19 pandemic. The capacity of domestic methanol plants to conduct maintenance is expected to increase to 6.55 million mt/yr in Apr, and 5.85 million mt/yr in May-Jun.

Methanol plant maintenance in spring turnaround season (Apr 14 updated)

China methanol supply keeps ample in Apr, with some plants restarting after the maintenance. Methanol market is in the lack of advancing momentum, with buyers adopting wait-and-see approach while methanol importing rebounding. Methanol market is expected to keep weak in the short term with downward space capped after the sharp decline earlier.