Methanol inventory reduction may not live up to expectation in Dec

China methanol price kept firm and rose this week. Methanol futures were resilient and coastal spot price hiked to 2550-2560yuan/mt as of Nov 21.

In the week ending Nov 21, China methanol tank inventory in main ports decreased slightly by 4.5kt week-on-week to 1,281.5kt, including 974.5kt in East China and 307kt in South China.

Methanol storage tank inventory in East China main ports increased 2.5kt on week to 974.5kt on Nov 21. Tank inventory was 658.5kt in Jiangsu, up 15.5kt; and 316kt in Zhejiang (Ningbo and Jiaxing), down 13kt over the same period. Methanol storage tank inventory in South China main ports decreased 7kt on week to 307kt on Nov 21. Tank inventory was 127kt in Guangdong, down 1kt week-on-week; 180kt in Fujian, down 6kt over the same period.

Forecast based on the arrivals of methanol to China, the amount is expected to reach about 1.1 million tons in Nov, including 872kt of Iranian origin cargoes and 280kt of non-Iranian origin cargoes. The amount of cargoes from Iran is consistent with Iran's shipments of methanol loaded in Oct.

As of Nov 21, about 450kt of methanol cargoes in Iran have been loaded for China, which would arrive in Dec. And the amount of imports from Iran to China is estimated to approach 600-700kt in Dec.

As for non-Iranian origin cargoes, on account of recovery of plants as well as requirements to clear the tanks toward the end of the year, the amount of cargoes to China is revised up to 350-400kt in Dec.

Therefore, China methanol imports are estimated to reach about 1 million tons in Dec, down slightly from Nov.

In a conclusion, the imports are expected to reduce in Dec, but the reduction may not live up to market expectation. China coastal methanol inventory has been hovering high, cushioning the reduction of imports. And also China domestic methanol plant operating rate maintains high. On demand side, MTO plant operating rate keeps high, while demand from traditional downstream sectors is slack.

Methanol price currently rises amid the anticipation of inventory reduction, but then the price may consolidate at highs as inventory reduction may not live up to expectation.