Methanol supply expected to recover, and the market lacks momentum

China domestic methanol production is estimated to reduce to 6.4 million tons in Jul, with several plants under maintenance. Firstly, due to poor economics for MTOs, some plants integrated with methanol units underwent turnarounds. Secondly, due to good profits of methanol earlier, some plants postponed the maintenance to Jul.

Toward the end of Jul, plant turnarounds are approaching the end, while several plants are poised to restart in interior regions of China.

The market is now focused on the restarts of MTO units recently, as well as the long term contracts with methanol suppliers.

- Zhejiang Xingxing has restarted its MTO plant this week, supportive to methanol price.

- Yangmei Hengtong has recovered contracts for methanol supplies, and the MTO unit is likely to restart on Jun 26.

- Tianjin Bohai Chemical has postponed the restart of MTO unit to mid-Aug.

- Nanjing Chengzhi restarted its first unit but shut its second unit (large one) on Jul 14. And the second unit is likely to complete maintenance and restart in end-Aug or Sep.

Restricted by accelerating of tank inventory rise in coastal regions, methanol price is expected to keep consolidation in Aug, despite restarts of MTOs.

There will not be demand peak until Sep. Currently, formaldehyde and DME plant operating rate remains low due to slack downstream demand. In terms of acetic acid, it would enter plant turnaround season in Aug. Tianjin Bohai Chemical, Henan Longyu, Hualu Hengsheng, Anhui Huayi and Yanchang Petroleum all have maintenance plans starting from end-Jul or early Aug, for half a month or 1 month. Jiangsu Sopo is poised to shut its acetic acid plant in late Aug for maintenance.

In a conclusion, China methanol production is expected to recover while the turnaround in autumn has yet to begin. It would also take time for downstream plant operating rate to rebound. Methanol market would be in the lack of advancing momentum.