Global Methanol Market Prices Expected to Rise in Q1, 2024
Preface: In the first half of December, China’s coastal methanol market prices mainly moved sideways, and the overall market underperformed, as methanol supply didn’t decrease as expected and downstream demand had no substantial improvement. However, with overseas units taking maintenance intensively, China’s domestic spot market prices rebounded. In Q1, 2024, the market supply gap is expected to further enlarge with more overseas units to take maintenance, supporting the global methanol prices to rally gradually.
From December 10, 6 methanol units with a total capacity of 10,550kt/a began maintenance successively in Iran, taking up about 68% of the total capacity in the Middle East. In addition, some methanol units in Southeast Asia, the U.S. are also scheduled to take maintenance in Q1, 2024. Boosted by the expected decline in imports, China’s methanol spot and futures prices went up.
Important Overseas Methanol Units Running Status
Source: SCI
Middle East: Intensive unit overhauls are anticipated to influence import shipment in January to February 2024.
From December 4, many methanol plants in the Middle East began to sell December 2023 to March 2024 shipments by tenders, offering at a premium of 0.5%-1.5%, but Chinese buyers gave counter offers at a premium of -3%-0.8%. The spread was extremely large, resulting in a long negotiation time. Finally, sellers made some concessions due to large sales and inventory pressure. Recent dealing prices were at a premium of 0%-0.25%. According to import shipments tracking, the total volume of December shipments from a certain country in the Middle East may decrease by about 8% from November. On the whole, the unit shutdown in the Middle East in Q4, 2023 is earlier compared with that in previous years, but whether the total capacity can surpass that of last year remains to be observed. The reduction of supply corresponding to the unit shutdown in Q4 is expected to be reflected in the shipment volume in January and February 2024, which may push up the selling prices again.
Europe & the U.S.: Restocking cycle combines with unit maintenance are expected to underpin the price rise in Q1, 2024.
In the U.S., many units resumed normal production from late to end-November, so local methanol output rallied again in December. Influenced by the ship congestion in the Panama Canal, more South American cargoes flowed into Europe. Meanwhile, the supply-demand imbalance in the U.S. also squeezed more cargoes to Europe. Consequently, the supply in Europe became more sufficient, and local methanol prices dropped from € 354/mt in November to €305-307/mt in December, down over 13%. According to SCI, there are still two methanol units in the U.S. scheduled to take maintenance in Q1, 2024. In addition, with the destocking cycle ending, a new restocking cycle will begin. Therefore, the methanol prices in Europe and the U.S. may climb gradually, but players still need to pay attention to the startup time of the newly added 1,800kt/a unit in the U.S.
In conclusion, after the destocking period with low prices at the end of the year, the methanol prices in most global markets are predicted to go up in Q1, 2024 amid supply reduction and restocking demand.
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