China Coastal Methanol Market Price Rise May be Curbed
After the Chinese New Year holiday, most chemicals saw obvious price rises, while the price rise of methanol remained slow till earlier this week when the methanol prices rose by a large margin. Up to March 8, the methanol price closed at RMB 2,578/mt in Jiangsu, up 7.17% from February 10, and that closed at RMB 2,000/mt in Inner Mongolia, up 19.4%. Recently, the methanol industrial chain was relatively healthy, and the mainstream dealing prices moved up, supported by rising crude oil prices, downstream restocking and short-covering demand, unit overhauls at home and aborad, etc. For the future coastal methanol market price trend, there are still several important factors worthing attentions.
1. The growth of methanol consumption from the olefin industry slowed down.
As showed in the below charts, in the past several years, China’s methanol supply kept increasing in spite of slow growth. At the same time, the methanol consumption from the major downstream industry, the olefin industry, also saw a decline in its growth rate.
Challenged by low oil and olefin prices, the commissioning cycle of CTO/MTO units was extended in recent years. The olefin capacity growth has slowed down. On the one hand, the number of newly added projects is limited after the commissioning of former approved projects. On the other hand, crude oil prices kept dropping, dampening the cost advantage of CTO/MTO projects. Moreover, wide fluctuations in methanol prices and Low profits weakened the production positivity of olefin plants. Besides, influenced by the COVID-19 pandemic in 2020, the overall demand increment was limited.
