Indonesia's Kaltim cuts methanol output as margins fall

Petrotahlil - Indonesian methanol producer Kaltim has cut operating rates at its 660,000 t/yr Bontang unit to 80pc because of weak market fundamentals and squeezed margins.

Production rates at the methanol unit have been progressively reduced over the past few weeks. The producer has no timeline to ramp-up production again.

Production margins have been eroded by the fall in methanol prices to around $165-175/t cfr southeast Asia, as well as weaker fundamentals across the region amid the Covid-19 pandemic.

A sharp drop in methanol demand in southeast Asian markets such as Indonesia, Singapore and Malaysia since late March has led to a fall in sales from most producers and sellers in the region.

Kaltim is Indonesia's sole methanol producer and sells a large amount of its output in the domestic market. Demand in Indonesia has fallen in the past three months because of restrictions imposed to curb the spread of the coronavirus.

END