Published on September 6, 2017

The Chinese government in past few years has been taking strict norms related to environment protection. There have been several mishaps in petrochemical units which in last few years leading to death of many people. The surrounding environment has been the highest affected area mainly due to leakage of harmful gases or instance of fire washing away whole of the town. This has compelled the government to take strict and safety measures for all the petrochemical giants.

Currently fourth round of inspection is going on covering eight provincial-level areas. The areas under inspection are Shandong, Qinghai, Xinjiang, Hainan, Sichuan, Jilin, Zhejiang and Tibet. Zhejiang Province is a large destination of methanol imports. Some methanol capacity is in operation in Qinghai, Xinjiang, Hainan, Sichuan and Jilin. And Shandong Province is a major methanol producing as well as consuming region in the north. There’s methanol capacity totaling about 6.6 million tons per year in Shandong, and many downstream plants congregate in this Province as well.

There has been reverse in the market trend in Chinese market. By second half of June the methanol market follows the uptrend commodity futures. As a result the demand remains weak and bit slow. By starting of August the supply is expected to see an upward trend. Shandong ENN is likely to expand its existing methanol production capacity. The unit is based in the Shnadong province of China. The unit will increase its production capacity by 300 KT/year. The company will start its unit is the August end or September. Mingshui Dahua’s 600kt/yr new unit and 350kt/yr old unit in Shandong are both likely to run normally from August. Adding to that is the expectation of the startup of Luxi Chemical’s fresh capacity in Aug-Sep. On contrary the traditional demands for downstream industries continue to remain slow. The demand from MTO plants is also bearish and will gain momentum only after few months.