About  4  million  mt/year of  new  Iranian methanol capacity expected to begin production this 

year has been delayed from its original schedule, trade sources said. This is expected to help 

support the product's prices globally, they added. 

While  Kaveh  Petrochemical  Company's 2.3-2.5  million  mt/year  plant  in  Bandar Dayyer is 

expected  to  start  commercial  production  by  the  end  of  this  year, Marjan  Petrochemical 

Company's 1.7 million mt/year  plant at Assaluyeh is expected to start up by early 2018, trade 

sources said. Both plants were originally expected to start in 2016. 

The two companies could not be reached for comment on the reasons behind the delay. 

"We  were earlier  told  that the Kaveh plant would start by March this year. However, we now 

understand  that  the  start  up  has  been  delayed to end-2017," a Dubai-based  trader said. 

"Kaveh may even be started up early next year," a consumer based in China said. 

Marjan's plant is expected to start by early 2018, sources said. 

PRODUCT DESTINED FOR CHINA 

Product  from  these  two  plants  is expected to be sold into China and a delay  in supplies in 

likely  to  cause  tightness and lend support to prices. Iran is the largest  exporter of methanol 

to China and exports about 200,000 mt/month of the product to the country on average. Most 

of  the  methanol  exported  into China is to meet the requirements of new methanol-to-olefins 

plants  that  have  come  up  in  the  country. These  include  Qinghai  Damei  Coal  Industry's 

300,000  mt/year  ethylene   capacity  MTO  plant   in  Xining, Qingha  province  and  Sinopec 

Zhoong  Tian's 900,000 mt/year ethylene capacity plant in Ordos, Inner Mongolia. 

Besides  these, there  are  several  other  MTO  plants slated for completion in China in 2017 

including  Shenhua  group's  MTO  plant at Urumqi in Xinjiang province and Shenhua Xiwan's 

plant at Yulin in Shaanxi. 

The  bulk  of  the CTO/MTO  ethylene  projects  were  expected  to  come onstream by 2018. 

Chinese MTO producers have reportedly built up huge storage capacities for methanol near 

their plants to accommodate stocks as high as 400,000 mt at a time. 

"This  MTO  plants  storing  methanol  has  reduced  Chinese  methanol inventories in ports. 

Against the usual inventory of 1 million mt, they are currently storing nearly half that volume," 

the Chinese consumer said. According to latest data from Chinese customs, methanol import

s into China stood at 587,848 mt and 679,918 mt in October and November respectively. 

Data on exact methanol inventory in the country was not available. 

Demand  for  methanol  in  China  has supported the product's price, S&P Global Platts data 

showed. Methanol  prices  in  the  country  rose  58%  during  the  August-December period: 

methanol  was  assessed  at $222/mt CFR  China on August 1 while the last assessment for 

2016 stood at $350/mt CFR China. This was the period when MTO producers in China were 

procuring methanol for storage. 

A  rise  in  methanol  prices  in  China  traditionally propels prices in other markets including 

Europe and the Americas.