China Methanol Supply to Keep Tight in Dec
China’s natural gas-based methanol units have entered the regular overhaul season. Meanwhile, the import volume is predicted to further decline. Thus, China’s methanol supply may keep tight in December.
From 2017, China’s natural gas-based methanol units usually take maintenance in Q4 for about one month, as natural gas is preferentially supplied to the civil field in winter. In 2021, the natural gas-based methanol units in Southwest China are scheduled to start maintenance from end-November to early December for about one or two months. It is preliminarily estimated that the loss of output in December will be more than 10kt. In other regions, the overall output increment will be limited despite of the restart of some units. Based on the production and maintenance of domestic methanol units, China’s methanol output is estimated at around 5,600kt in December.
As for import, most overseas resources from the Middle East (excluded Iran), South America and Southeast Asia will still preferentially flow into the regions with high arbitrage spaces. It is predicted that the volume of non-Iranian resources to China will continue to decrease in December, and the cargoes from certain area in the Middle East will also shrink, given the extremely slow shipment caused by the decline in local methanol inventory. It is estimated that China’s methanol import volume will be 760-780kt in December.
Overall, the methanol supply will be relatively tight in December, which will provide some support to methanol prices. However, players still need to pay close attention to the changes in cost, inventory and demand, especially the cost side, given the strong correlation between methanol and feedstock markets this year.
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