Since the fourth quarter of last year, terminal demand has entered the off-season. Many domestic coal-based olefin enterprises have stopped for maintenance. The demand for methanol, especially in eastern China, has shrunk sharply. In this case, the supply and demand pattern of methanol market is unbalanced, and methanol prices tend to be weak after the Spring Festival.
| Azodicarbonamide (AC foaming Agent) |
Supply pressure released
In terms of domestic supply, according to data released by Longzhong Information, the methanol plant overhauled before the Lantern Festival will usher in a peak of re-production, which will reach 7.19 million tons from mid-late February to early March. From late March to April, 2.75 million tons of methanol plants will be re-produced one after another in China. However, after the end of March, the domestic methanol market will be overhauled in spring, when some domestic methanol enterprises will carry out overhaul, which will eliminate the impact of methanol production in late March on domestic methanol production. Therefore, in this case, after the peak of methanol production at the end of this month, the market supply pressure will basically be released.
On the import side, as several methanol plants in Southeast Asia reduce their load, the international methanol supply shows a slight decline, and the domestic methanol price has risen from the bottom. In fact, from the current situation, the arbitrage space of methanol import is gradually narrowing, which will have a certain inhibitory effect on methanol import.
In terms of inventory, the high inventory is an important reason to restrict the continuous rise of methanol price. As of February 21, methanol port stocks in eastern and southern China were 836,000 tons, up 357,200 tons from the same period last year, with an increase of 74.60%, the highest since 2014. Among them, the inventory of methanol ports in East China was 607,500 tons, up by 234,500 tons compared with the end of last year, up by 62.87%; the inventory of methanol ports in South China was 228,500 tons, up by 12.27 tons, up by 115.97% compared with the end of last year. However, recent market participants reported that due to the change of market mentality, the willingness of traders and enterprises in East China to take goods increased significantly, which helped to alleviate the high methanol inventory in the southeastern coastal areas.
Expectations of a warming demand increase
| EDTA |
After the Spring Festival, downstream demand for methanol has recovered, which forms a certain support for methanol prices. In terms of traditional demand, traditional downstream enterprises of methanol have resumed production after the Spring Festival. According to the data published at present, besides formaldehyde, the start-up load of acetic acid, dimethyl ether, MTBE, DMF and other enterprises has shown a steady and rising situation, and the market demand for methanol has warmed up. In terms of emerging demand, due to the obvious repairs of the profits from methanol extraction to olefins and the entry of terminal film into the peak consumption season, many domestic coal-based olefin plants which had been repaired earlier have recently resumed production. At present, coal-based olefins account for nearly half of domestic methanol consumption, so the warming of coal-based olefins will play a strong role in stimulating domestic methanol demand, especially in eastern China.
In summary, although domestic methanol enterprises concentrated on re-production, high inventory, the overall supply pressure is still great, but from the current situation, the supply side of the shortfall has basically been realized, do not have the conditions for further deterioration. On the other hand, in the spring, the downstream consumption of methanol began to pick up gradually. In this case, the overall supply and demand pattern of methanol will gradually transform, the excess supply will gradually ease, and the price focus of methanol is expected to gradually rise. Based on the above judgment, we believe that the current methanol has a certain long-term value, which can be established in the medium and long term after the price exceeds 2600 yuan/ton.
| Melamine |