High Inventory is Likely to Lead Coastal Methanol Price Down
As of May 21, the methanol inventory in Jiangsu reached 754kt. From mid-April, the methanol inventory increased for consecutive five weeks, up 198.4kt and up 35.71% from the same period of 2018. High inventory and sluggish demand are likely to make the methanol prices decrease in the coastal areas.
1. Methanol inventory in coastal area reached the peak
In April and May, as the methanol inventory in coastal areas reached the peak, there was no storage tank for the arriving imported cargoes. Changing the port and unloading became the best effective way to relieve. Many ships changed from East China to South China. From April to May, there were many ships changing the ports. Overall, it is difficult to change the tight methanol capacity in coastal areas in the short run.
2. The import increased, and methanol producers in coastal areas were passive to cut production.
When the prices are higher than the cost, importers and downstream producers prefer the low-price import cargoes, resulting in unit shutdown at some methanol producers in coastal areas. As of May 26, the methanol shutdown unit capacity in East China (Jiangsu and Zhejiang) accounted for 32% of the total capacity in East China. The daily output loss was around 3,150mt. Besides, the inventory at a few methanol producers in coastal areas was high, and some producers had to sell the products so as to release the pressure.
3. Downstream producers changed the purchasing pattern
Downstream producers were extremely cautious, and they mainly purchased on a rigid demand. This year’s feedstock market is different from the previous two years, but the cycle and frequency of downstream procurement still adhere to the strategy of previous years.
Overall, the methanol prices fluctuate at lows at present. The methanol inventory reaches 1,200kt in coastal areas (excluding Lianyungang). The high inventory, import and high warehouse charges will cause huge pressure on the methanol prices in coastal areas.
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