H2 2022 China Methanol Market Expected to Rebound
In H1, 2022, China’s methanol market first climbed to a high level and then fluctuated downwards, and the mainstream prices went lower from H2, 2021 but higher from H1, 2021. In Jiangsu, the mainstream prices were RMB 2,600-3,000/mt, influenced by multiple factors, such as macro-environment changes, high feedstock prices, temporary supply tightness, newly added downstream unit, inventory growth. In H2, 2022, the methanol market will remain under mixed factors, and the tug of war between cost and fundamentals will continue. It is predicted that the methanol prices may first drop and then rally in H2, but the overall fluctuation range may be limited.
Rising energy prices provided obvious cost support to the chemical market.
In H1, 2022, against the background of geopolitical escalation, the prices of energy products including international crude oil, coal and natural gas have risen to varying degrees, which supported the chemical market from the cost side. In H1, China’s steam coal prices remained at a relatively high level, exerting heavy cost pressure on methanol producers and bolstering methanol prices from the bottom. And as shown in the above chart, except acetic acid and DCM, most products in the methanol industrial chain saw price rises of different extents.
From January to June, China’s methanol output was estimated at 38,350kt, up 2.43% Y-O-Y. The monthly average operating rate was 71.89%, down 1.15% Y-O-Y. Although the operating rate edged down, the capacity base grew with the stable operation of newly added units, so the total output still advanced.
In H1, China’s methanol import volume was estimated at 6,130kt, up 4.78% Y-O-Y. On the one hand, the cargoes from certain country in the Middle East and South America flowed into China steadily. On the other hand, the import volume from a few European countries also increased somewhat. Thus, the total import volume ramped up.
In H1, the methanol consumption volume from sample downstream industries was estimated at 35,340kt, up 4.86% Y-O-Y. In June, the newly added MTO unit at Tianjin Bohua Chemical was put into operation, and the methanol consumption from the CTO/MTO industry in H1 increased by around 10% Y-O-Y. The demand from traditional downstream industries was tepid. The methanol consumption from the DME industry dropped by 26%, with the operating rate of DME units dropping on the end demand restriction.
However, the methanol consumption from silicone and DMC which are involved in new materials and new energy fields increased notably. Driven by the development of the new energy vehicle industry, the demand for electrolyte surged. In H1, the methanol consumption from DMC grew by around 77% Y-O-Y, but the contribution to the overall methanol demand was relatively limited because of its small consumption proportion. Although the demand increased slightly, the supply also rose, so the market was still under oversupply on the whole.
Continuous inventory buildup was a hinder for the price rise.
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