Methanol market: spring turnarounds VS supply recovery

With the plant turnaround season ongoing, China methanol plant operating rate has dropped to around 73% as of the week ending Mar 28, down from the high point of 79% recorded in mid-Feb. The reduction in domestic methanol supply supported the prices. However, the scale of plant turnarounds in this spring seems smaller than in the same period of last year. Attracted by modest profits, several plants have shortened the turnaround period.

In Apr, some earlier shut plants are going to restart, and China domestic methanol production is estimated to begin increasing month on month in Apr and May.

In coastal market, there's some uncertainties. With the recovery of overseas supplies, China methanol imports are estimated at 650-700kt in Apr. In mid or late Apr, shipments from Iran are expected to recover, and the arrival date would be the key affecting China methanol futures and spot prices.

On demand front, MTO and other downstream plant operating rates are quite stable currently, but then the demand is expected to weaken. Tianjin Bohua and Yangmei Hengtong are poised to shut MTO units in Apr or May for maintenance. Some other MTO unit in coastal region may also undergo maintenance Apr, but it has not been confirmed.

In a conclusion, methanol market gets supported in the near term, but may turn weak in the longer run. With the recovery of domestic and imported goods, as well as approaching of downstream plant maintenance, China methanol supply is likely to get longer.