Methanol prices probably will revive and hit new highs due to constant rise of China's domestic demand and limitations on supply side.
According to ICIS data, the recent rise in prices was a reflection of rising demand for new startup Methanol-to-Olfine (MTO) plants that seems to be firm and continuous. Since November 2017 and start of cold season, a major portion of gas supply has been allocated to residential consumption and a lack of natural gas supply to producers results in an intense decline in active gas-based methanol producer plants and production capacity which makes the market tighter.
- 3.18 MT of production capacity has been shutdown since Nov 23 in China.
- SABIC's three production lines get back to work since Dec 23 with 2.4 MT capacity but line 5, with 1.7 MT production capacity, has been shutdown again due to an unknown reason.
- Petronas restarts its second production plants with 1.3 MT production capacity , which had been shutdown since Dec 23.
- Many South American plants ( 2.6 MT estimated capacity ) has been shutdown since late December.
There are concerns about China's additional 5 to 6 MT production capacities that will be added during 2018. The new production capacity won't be added anytime sooner than late Q2 of 2018, possibly after production units maintenance and overhaul so that domestic supply can't be affected until Q1 of 2019. Furthermore, import supply level will be solid at Q1 of 2018 and there is a chance to increase import levels for Q2 of 2018.
After Chinese new year holidays and as the market approaches late February, the demand side gets stronger. Prices will likely rise and could hit previous highs at 380 to 400 USD/T.
