FocusOlympics strains China methanol transport

29 July 2008 08:09  [Source: ICIS news]

By Rainy Ma and Heng Hui

SINGAPORE (ICIS news)--Transport of methanol in China was being hindered by restrictions on moving hazardous materials ahead of the Olympic Games, sources in a number of  logistic companies based in the country said on Tuesday.

The 29th Olympics will be held in Beijing from 8 August and will last for 16 days.

The cities of Beijing, Tianjin, Dalian and Shanghai, which are the venues for the Olympic activities, have restricted the carriage of certain chemicals a month before and during the games for security reasons.

Methanol is one of the more than 257 chemicals classified as dangerous cargoes to be restricted.

The movement of methanol cargos had been diverted to bypass these cities, and large northwest producers were heard to have faced more difficulty in transporting goods from their operating sites to the coastal markets.

“The cargo transport takes longer due to the roundabouts,” said a north China-based producer in Mandarin, adding that “delivery schedules are compromised.”

Another producer in northeast China said in Mandarin that he would need to start pre-marketing his molecules even before they are produced, so as to avoid inventory pressure since there would be a longer wait between each shipment.

Any impact on prices may take time but market players felt that pre-marketing efforts may pressure values lower as buyers would be in a better negotiating position.

Methanol is moved either by barges, rail or trucks in China.

Barge shipments to ports of Shanghai, Ningbo, Qingdao, Dalian and Tianjin have also been affected. These ports have restricted the carriage of hazardous chemicals including methanol from 20 July to 31 August.

Entry and exit will be subject to approval. In addition, the Lanshan port in Shandong province has reportedly banned chemicals posing security risks, which include methanol, from 15 July.

Rail transport of methanol is affected if travel past the Liuzhou and Guangzhou stations in south China was involved.

Transport of hazardous cargoes between these two stations had been stopped since the end of June, causing inconvenience for northwest and southwest producers as this was a popular route to move methanol from their plants to south China.

Currently, the rail ban has had limited impact due to high inventory levels and slow demand in south China. Industry players, however, said that the restrictions would become more disruptive closer to the Olympics.

Trucking methanol required roundabouts to avoid the Olympic sites, incurring additional time and costs, sources in Chinese logistic companies said in Mandarin.

Adding to tighter pollution and security controls, methanol derivatives also suffered from reduced production or forced closures if the factories were located near the Olympic sites, a downstream end-user said.

Handling of volatile methanol in summer temperatures generally incurs more product losses in addition to the numerous Olympic controls, prompting most downstream converters to choose to shut their plants for maintenances instead, he added.

Distribution of the methanol derivatives, such as acetic acid, was also affected, as it is among the list of controlled hazardous materials.

Sluggish downstream demand will have a detrimental effect on prices, market players said.

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By: Heng Hui
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