Asia methanol prices have rebounded by 21% since August

For two months in a row, Asia methanol contract prices have cumulatively rebounded by 21% or $45/ton (Chart 1). Prices are currently at $260/ton. This recovery was inevitable as spot prices in Asia had fallen below the cash cost of Anthracite coal-based Chinese producers of $220/ton. This was resulting in supply cuts as companies cannot afford to persist with production if prices remain below marginal costs. Besides, historically speaking, prices have never stayed below $200/ton for long.

Chart 1: Methanol Historical Prices (USD per ton)

Source: Author’s analysis, Methanex

Methanex’s (MEOH) Q2 2020 financial results state that:

“Methanol-to-olefin (“MTO”) demand was strong as several plants resumed production and maintained high operating rates following planned and unplanned outages in the first quarter.”

“Early in the third quarter, we are beginning to see early signs of improving methanol demand as economic activity begins

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