How will China port closure affect methanol cargo arrivals

This week, the freezing weather conditions begin in many regions. On Dec 18, Yangtze River Pilotage Center verified with the traffic control center along the route that all sections of Zhangjiagang Port have been closed, and there is a trend of deteriorating conditions at Nantong Port, which has not been closed for the time being. Zhejiang Maritime Safety Bureau issued notice that due to poor visibility, traffic control due to the fog has been implemented in the waters to the west of Dahuangmang and Jintang Bridge since 2:30 p.m. on Dec 18. Under extreme weather conditions such as snow and strong winds, the ports have sent warnings of closure. Then, what about the subsequent arrival of methanol cargoes?

According to CCFGroup's statistics, from Dec 18 to Dec 24, the planned arrival volume of methanol cargoes is calculated at 369,000 tons, at middle or slightly high level. Among the cargoes, about 184,000 tons are expected to arrive at Jiangsu, 97,000 tons at Zhejiang, 68,000 tons at South China, and 20,000 tons at North China.

As for the closure of the ports along Yangtze River at Jiangsu Province, at present, it is closed on the route of Zhangjiagang Port and upstream. Reserve areas for methanol tanks mainly include Zhangjiagang, Jiangyin, Changzhou and Nanjing. According to the statistics, those areas are expected to receive 60,000 tons of methanol cargoes this week, of which, 30,000 tons have already been discharged but the other 30,000 tons are expected to arrive during this weekend.

As for the closure at Ningbo Port at Zhejiang Province, it would impact methanol cargo arrivals to a limited extent. There are about 50,000 tons of cargo arrivals this week, which have all arrived.

As of Dec 18, the month-to-date arrival of methanol cargoes has reached 975,000 tons, of which, Iran accounts for 786,000 tons and non-Iranian origin cargoes take up 189,000 tons. With intensive arriving of shipments from Iran, the total volume is expected to reach 1,400,000 tons in Dec 2023. It was attributed to high operating rate of methanol plants and large volume of shipments from Iran in Oct-Nov.

In the future, the gas restrictions have begun in Iran, with several plants such as ZPC and Kimiaya shutting down. With reduced shipments from Iran in Dec, the cargoes arriving at China would decrease notably in Jan.

Also due to gas restrictions, several natural gas-based methanol plants have shut in China and would not restart until Jan or Feb of 2024, and then China domestic methanol supply may keep high in Jan-Feb.

As for downstream plants, some MTO units such as Zhejiang Xingxing, Ningbo Fund and Nanjing Chengzhi Phase II have turnaround plans in Jan or Feb 2024. And therefore, methanol supply and demand fundamentals may stay weak, if MTOs are to shut as scheduled.