methanol market is bolstered by higher cost recently.

In terms of demand, Sep and Oct are typically the peak demand season, however, the expectation of improvement in demand for methanol has also not materialized. The average operating rate of downstream plants declines due to drops in MTO and MTBE operating rates. Olefin margins are squeezed, and thus some MTO plants could undergo maintenance. Due to the lack of crude import quota, some independent refineries reduced operating rate and hence MTBE operating rate was dragged lower. In addition, demand for methanol to produce hydrogen also decreases and is unlikely to recover in the short term. Acetic acid profits are good, and the plant operating rate has been kept high, so any increase in demand for methanol would be limited.

As for the fundamentals in the fourth quarter, methanol supply is expected to shrink. Methanol capacity, amounting to 5.47 million mt/yr, could be affected by gas restrictions in winter, which could lead to production loss of 400kt a month. However, the reduction in demand for methanol should not be neglected if MTO plant is shut because of poor economics.