Methanol Market Trends Regional in Mid-September, Eyes on China Loadings

In mid-September, the international methanol market continued its regional divergence, with Asia showing relative weakness and prices edging lower. China's ongoing inventory build-up continued to weigh on the market. The US market remained largely unchanged earlier in the month but strengthened markedly around mid-September, largely due to maintenance at several plants. European demand remained moderate with adequate supply, leading to a slight softening in prices.

The Asian market displayed relative weakness overall. As of the September 19 close, the CFR China price was assessed at $260 per tonne, down $1.5 per tonne from early September. In contrast, the CFR Southeast Asia price reached $326 per tonne, a modest rebound of $3 per tonne over the same period.

In Northeast Asia, markets like Taiwan and South Korea saw minimal fluctuation. Downstream acetic acid plants in these regions experienced reduced operating rates alongside normalized operations, resulting in limited demand stimulation. Although China benefited from the restart of port Methanol-To-Olefins (MTO) plants, this was offset by significant port inventory build-up. Data from Jinlianchuang indicated that as of September 18, total methanol inventories at East and South China ports reached a record high of 1.3298 million tonnes, a weekly increase of 62,500 tonnes.

The price rebound in Southeast Asia was attributed to tightened supply following maintenance shutdowns at major local plants, coupled with reasonably robust biodiesel demand in neighbouring regions.

The Indian market trended moderately. The CFR India price stood at $317 per tonne on September 19, reflecting a weekly decline of $6 per tonne. Local operators continue to seek alternative cargoes, primarily from the Middle East. Furthermore, an arbitrage window has recently opened between China and India. With Middle Eastern and Chinese cargoes entering the market, other regions may also increase supply to India. Against a backdrop of moderate local demand, with the monsoon season expected to persist until month-end, market prices have shown relative stability.

As of September 22, the CFR China price remained largely unchanged at $260 per tonne. Incomplete statistics indicate approximately 1.2 million tonnes of September imports had been unloaded by press time, with total September imports projected to reach 1.65-1.70 million tonnes. Iranian shipments accounted for around 750,000 tonnes, while non-Iranian production saw a slight decline. Market attention is focused on loading activity for October shipments.

In Europe, the FOB Rotterdam price was assessed at €286.25 per tonne (equivalent to $336/tonne) on September 19, down €9.75 per tonne from early September. The decline was primarily driven by weak fundamentals. Supply remains adequate as major local producers maintain stable operations and import volumes are steady. Demand, however, has been below expectations, with some local acetic acid plants undergoing maintenance until month-end. While risks to gas-based supply in the region persist for the fourth quarter, they have yet to materialise, and prices have factored in the current spot market oversupply.

The US market strengthened markedly around mid-September. The FOB US Gulf price closed at 101 cents per gallon (equivalent to $336 per tonne) on September 19, up 6 cents per gallon from early September. This increase was primarily driven by a supply contraction. Statistics indicate that a major methanol plant in the region with an annual capacity of 1.5 million tonnes has gradually reduced its operating rate and halted production since mid-month. This has caused the regional operating rate to drop from over 90% to around 80%. On the demand side, overall consumption remains moderate for products like formaldehyde and acetic acid. However, some industry players anticipate improved demand in the fourth quarter, bolstered by the Federal Reserve's interest rate cuts and an expected recovery in the construction sector next year. Current regional inventories are neutral to slightly elevated, and market participants suggest prices are likely to remain range-bound until the hurricane season concludes.