Methanol prices in China have recently seen a price uptick

Methanol prices in China recently witnessed an uptrend attributed to increasing demand from the downstream dimethyl ether and formaldehyde industries. Moreover, several methanol production units in China underwent scheduled maintenance, while others unexpectedly shut down, leading to a tight supply overall. This situation prompted a rise in methanol prices across the mainland market. The availability of resources at ports is progressively diminishing, particularly because of the limited supply of certain high-quality chemical coal.

Downstream demand is substantiating the prices for methanol

The downstream dimethyl ether market is experiencing potential demand growth due to a significant operation halt in major DME plants, such as, Xinxiang Xinlian.

For MTBE (Methyl Tertiary Butyl Ether), plans for construction and expansion at a facility indicate an anticipated increase in demand, likely leading to upward pressure on prices.

Lower supplies have prompted higher prices for methanol in China

On the supply side, several methanol production facilities across different regions have undergone maintenance or reduced their production levels, contributing to a tighter supply in the market. For instance, organizations in major methanol-producing regions such as Chongqing and Inner Mongolia have taken several of their units offline for maintenance. Additionally, some facilities have reduced their operational output, further constraining supply.

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Although there have been efforts to restore production capacity at various other facilities, the overall loss in production capacity has counterbalanced and tripped these recovery efforts. This imbalance has led to a decrease in capacity utilization across the sector, exacerbating the supply constraints.