29 March 2010 02:16 [Source: ICIS news]
SAN ANTONIO, Texas (ICIS news)--Methanol production rates in China will hold the key to the global supply and demand balance and ultimately price direction, as the world will gain four new plants scheduled to come on stream during the second quarter, market players said on Sunday.
“There is [demand] growth in China, but the question is how much will they produce themselves? If they are importing they can easily swallow those four plants,” said one producer source on the sidelines of the International Petrochemical Conference (IPC).
The new plants scheduled to start up in Brunei, Egypt, Oman and Venezuela will add over 4m tonnes of additional supply to the market, around 10% of current capacity.
In the past, falling spot prices in the key China market have prompted local producers to turn down plants, causing a massive surge of imports. However, consumers cautioned that optimism over the ability of China to absorb large quantities of excess material was exaggerating market reality.
“Chinese producer economics are improving. Plants are getting bigger and coal prices are coming down,” a major European buyer said.
Meanwhile, the Chinese government is currently deciding whether or not to impose anti-dumping duties on methanol imports, which could affect China’s ability to absorb material from low-cost production centres.
Chinese spot prices were last seen trading at $285-295/tonne down from a high of $335/tonne in late January.
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