Methanol supply affected by gas restrictions and environmental protection

In the interior regions of China, methanol price moved up amid resilience. Firstly, Inner Mongolia Baofeng is conducting trial run on its new methanol and MTO units with requirements for merchant methanol from Northwest China market. Secondly, methanol supplies from overseas plants are disrupted due to gas restrictions in winter, buoying market sentiment.

The support from supply front is expected to be weak in Nov, but could turn stronger beginning from Dec. Plant operating rate in China is anticipated to plateau and then pull back from highs. Supply reduction from methanol plants fed by natural gas in Southwest China is certain in Dec. And then, consumption of methanol in adjacent markets could increase till the beginning of next year.

Methanol plants in Southwest China affected by gas restrictions

In addition, coking plants in Shanxi Province would usually be impacted by environmental protection in autumn and winter, with methanol production reduced. However, as the operating rate of methanol plants based on coke oven gas has been hovering low, with some plant lengthy-idled or shut for long, the impact from environmental protection on methanol plants in Shanxi is limited.

Methanol plants in Shanxi Province

China coastal methanol inventory is expected to begin decreasing this week. China methanol imports are expected to slash in Dec, on account of large plant shutdowns in Iran and Venezuela. Then, the inventory reduction at China's coastal regions could be more obvious and may last till Feb 2025. Though, the inventory has been remaining bounteous and the near-term reduction would not cause supply shortage, MTO units may increase the buying to stock up in response to the upcoming methanol inventory reduction in Nov and Dec.