China methanol import market disregards Iran plant resumption

SINGAPORE (ICIS)–China’s methanol market has disregarded the restart of Iranian methanol plant – Zagros Petrochemical’s methanol Plant 1- and continues to remain bearish as a result of deadly coronavirus outbreak with far reaching impact on demand.

Zagros Petrochemical was able to restart its methanol Plant 1 on 16 February after remaining shut since 11 January due to paucity of natural gas feedstock.

Gas shortages for methanol plants in major producer Iran had rendered several outages, or low operating rates across the country.

Even now Zargoes is able to operate Plant 1 only at 70% capacity while its Plant 2 remains shut because of low availability of natural gas.

Similarly, three other major plants in Iran are off line still waiting for normal resumption of natural gas supply.

The Chinese spot methanol market was thinly traded throughout the week, while the domestic ex-tank market experienced minor fluctuations.

Sentiments in the Chinese methanol market had been bearish since the Lunar New Year holidays, largely due to the Covid-19 outbreak.

After two days of price drops immediately after the market reopened from the holidays, Chinese methanol prices had been fluctuating though sliding gradually downwards.

Chinese players saw the demand factor as playing a much greater role as price determinant than supply nowadays because downstream demand was hammered by lowered consumption and various restrictions implemented in order to control the viral outbreak.

These includes quarantine orders that prevented some workers from returning to work and factories from restarting, and domestic logistic restrictions that limited transportation between provinces and possibly even between cities.

In light of the lackluster demand, players did not pay too much attention to supply, expecting imports for February and March to be sufficient.

Iranian methanol formed the bulk of China’s methanol import at 28%, followed by New Zealand at 15.7%.

Due to the recent Iranian plant shutdowns, Chinese players expected Iranian-origin imports to be tight and limited for the foreseeable future.

The methanol-to-olefins (MTO) industry was the most heavily affected sector as they are one of the largest importers of Iranian methanol.

This also resulted in a few MTO players sourcing for spot volumes for the February to early March arrival period in recent weeks.

Focus article by Kite Chong

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(Photo by Xinhua/Shutterstock)