Aug-Sep Methanol Import Volume Interpretation and Forecast
Introduction: China’s methanol import volume is unlikely to fall from a high level in August and September, as methanol cargoes from both a certain country in the Middle East and non-Iranian countries continued flowing to China for arbitrage under the background of overseas loose supply and early-August India sanctions. Therefore, coastal methanol prices may still see high downward pressure.
It is estimated that China’s methanol import volume may register at 1,543.7kt in August, up 441kt or 40% MoM, and it is predicted that the August export volume was 14kt, up 3.3kt MoM, for arbitrage in surrounding markets.
The overflows of non-Iranian methanol cargoes flowed to China.
The methanol import arrivals from other producing and selling countries, especially a certain country in the Middle East, increased in August, except for those from Qatar and Chile. In August, arrivals from a certain country in the Middle East reached 893kt, up 235.1kt or 23.51% MoM. In addition, the supply in main consumer markets around the world (excluding China) was abundant, keeping inventory mounting. As a result, overflows of most non-Iranian cargoes flowed to China, and the inflow volume growth was notable, as for cargoes from South America and Malaysia.
Arrivals at public warehouses climbed in August.
In August, arrivals at public warehouses advanced. From the perspective of arrival regions, the methanol arrivals rose in South China, Tianjin, Dalian and Jiangsu, while arrivals in Zhejiang decreased. SCI anticipates that Jiangsu methanol arrivals may grow to 882.2kt, up 242.3kt or 37.87% MoM. Intensive arrivals of imported cargoes at coastal public warehouses were influenced by multiple factors. Firstly, most players intended strongly to purchase forward month low-priced cargoes, considering the consistent price spread between high domestic and low overseas methanol prices. Secondly, due to bearish expectations for forward month market, and persistent price gap between high forward month prices and low front month prices, players saw risk-free arbitrage opportunities, which led to their frequent trading operations that they purchased front month methanol and sold forward month methanol. Thirdly, this year, as the scale and efficiency of some warehouses’ profitability weren’t as strong as in previous years, some warehouses cut storage fees to attract more customers to store goods. Additionally, a few storage enterprises in Guangdong and Jiangsu began engaging in methanol import trade and spot-futures arbitrage by themselves, waking up the potential resources further.
The operating rates at key coastal downstream plants were low, and the proportion of imports declined.
Maintenance of a 690kt/a MTO unit in Zhejiang, coupled with the low operating rates of other coastal MTO units, dragged down the proportion of imported methanol flowing into downstream plants this month, compared to the previous month. It is estimated that the overall imported methanol arrival volume at downstream plants will be 623.5kt in August, down 13.15 percentage points MoM.
Affected by India's cautious procurement of methanol cargoes from a certain in the Middle Eastern and the sustained high operating rates in this Middle Eastern country, its August loading volume reached 920kt. Although some non-Iranian (non-Iranian Middle Eastern and Southeast Asian) plants diverted their cargoes to India for arbitrage, arrivals from South America, particularly a certain country in South America and Southeast Asia, remained substantial. Overall, China's methanol imports in September are anticipated to be 1,400-1,420kt in September, and exports are predicted to be around 14kt.
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