Jiangsu Methanol Market Up on Supply Tightness
China’s methanol market has seen increasingly obvious regional differentiations since late January, with the coastal market performing stronger. The arbitrage window between Jiangsu and some inland markets including Henan and Shandong was open slightly. However, the resources from inland markets to Jiangsu were still limited due to logistics issues. Thus, the methanol price in Jiangsu kept rising on tight supply.
The supply in East China remained tight because of multiple factors. First, many overseas units have taken maintenance since December, especially in the Middle East. The overall inventory in a certain country of the Middle East is low, and its February shipment has decelerated. Second, the bad weather has caused frequent closure of ports in Jiangsu, dragging down the unloading speed of imported cargoes and then influencing the actual inventory buildup in East China. Third, the cargoes at many public tank farms in Jiangsu are controlled by a few players, so merchantable resources are limited. Although some cargoes from Shandong, Henan and Southwest China have flowed into Jiangsu for arbitrage, it is difficult to fundamentally solve the supply tightness in Jiangsu, given the logistics efficiency and the overall volume.
After the Chinese New Year holiday, the coastal methanol market price fell after rising and then moved sideways. On February 21, the methanol futures price rebounded under the support of black-series futures price rise. The dealing prices for forward month arrival non-Iranian cargoes climbed to $302/mt. Currently, the supply of imported cargoes is still relatively tight and import cost remains high, which may continue to support the coastal methanol market to some extent. However, considering some downstream demand has been released before the holiday, and buyers with rigid demand are cautious about purchasing. It is predicted that the spot price in Jiangsu may fluctuate in the range of RMB 2,500-2,650/mt in the near term.
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