China’s methanol futures market remains beset, with not much incentive available to encourage participation of more players, industry sources said. Producers’ buying interest remained low given high cost of methanol futures contracts compared with readily available cargoes in the spot physical market.
China restricts the use of natural gas by industries to prioritize the heating requirement of households during cold weather. There was initial optimism that volumes in the methanol futures market would stay high in the near term, but this may not be sustained if prices of physical cargoes are on a decline and bourse regulations are not improved.
Since June 2013, new warehouses in northern China have been approved to hold methanol cargoes intended for futures trade, to encourage producers inland to participate in the market. Methanol producers in the eastern and southern parts of China have a clear advantage over their competitors inland since most end-users are concentrated in the coastal regions.
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