UpdateChina’s Inner Mongolia methanol plants operating at 50%

(Adds details in paragraph 5, 6 and 7)

SINGAPORE (ICIS news)--Chinese methanol plants in Inner Mongolia, which have a total capacity of 1.55m tonnes/year, are running at 50% due to a shortage of the feedstock natural gas since mid-November, company sources said on Tuesday.

The plants include Boyuan’s 1m tonne/year methanol plant, Sulige’s 350,000 tonne/year methanol unit and Tianye’s 200,000 tonne/year plant.

The operating rates would be increased when the gas supply resumes at the end of winter, the sources added.

The Chinese government usually curbs the use of natural gas for industrial purposes, such as methanol production, and channels it to homes for heating at the onset of winter.

An estimated 3m tonnes/year of capacity in inland China has been cut due to lower operating rates or shut downs because of natural gas shortage in the winter months, according to industry sources.

However, the sources said inland parcels formed a minority of the methanol supply in the past year and therefore should not have much impact while coastal areas had always been supplied with imports.

Nevertheless, the situation was one of the contributing factors in the price increase last week, market players said.

Chinese methanol was assessed at $290-295/tonne (€194-198/tonne) CFR (cost and freight) China on Friday, up $20/tonne from the previous week, according to global chemical market intelligence service ICIS pricing.

Other methanol producers in China include CNOOC Kingboard Chemical and Yanzhou Coal Industry Yulin Energy.