China MTO operating rate declines amid poor economics

With China methanol to olefins (MTO) industry reaching a plateau, newly added MTO plants keep decreasing in recent years. As of Nov 2022, China MTO capacity amounts to 17.09 million mt/yr, with 3 new plants with combined capacity of 1.05 million mt/yr on stream in 2022.

In 2022, MTO profit was meager due to sluggish downstream demand. The average profit of methanol to PP, for example, was negative throughout Jan-Nov 2022, and plants were under immerse losses in Sep-Nov. Some MTO plants, especially those relying on merchant feedstock methanol, were faced with profound challenge.

Besides from the plants that have been shut due to poor economics, Sierbang plans to shut its plant in Dec, and Nanjing Chengzhi may also shut its second MTO plant but it has not been confirmed.

The operating rate of MTO/CTO plants in China has declined from around 90% in Jun to 80% as of Nov. In terms of methanol price, it is under immerse pressure, as port inventory has been increasing since Nov and is expected to further rise in Dec, while crude oil and coal price would be less supportive to methanol.

In the near future, methanol price may weaken, and MTO profit may recover some losses, while MTO plant operating rate is unlikely to increase.