After the continuous price rises in September, China’s methanol market entered a stalemate temporarily. The downstream users began to show resistance, as the constant feedstock increases have resulted in profit shrinks at some downstream producers. Although the overall downstream profits are fairish currently, the resistance to high methanol prices will curb the uptrend of the methanol market to some extent.
In Northwest China, the overall profit at the CTO plants with matched methanol units rose by about 30% in September, benefiting from the comparatively stable prices of coal and higher prices of olefin products. For those plants which had to purchase methanol, the profits slipped by about 20%, as the increment in feedstock price was more obvious than that in the product prices. On the whole, the profitability of the olefin plants in the inland market was fairish with the relatively stable demand support. In particular, with the newly added olefin capacity at Jiutai Energy Inner Mongolia and Ningxia Baofeng Energy Group released and the olefin unit at Datang Duolun Coal Chemical restarted, the merchantable methanol resources in Northwest China decreased notably, supporting local methanol prices to keep firm.
In the coastal areas, local MTO plants have various downstream products, such as PP, PE, PVC, EVA, MMA, EO, MEG, acrylonitrile, oxo-alcohols, etc. The profits at several representative plants with different downstream products are calculated, and it is found that the plants with more downstream products and longer industrial chain have lower sensitivity to cost changes and higher comprehensive profitability. However, the rises in methanol prices still led to a slight slip in the profits at the MTO plants in the coastal areas, overall.
For the traditional downstream industries, such as formaldehyde, acetic acid, MTBE, the profits were stable-to-rising, on the whole. For example, the acetic acid supply was tight due to expected unit shutdown, so the prices rose greatly, pushing up the profit. Nevertheless, there were also some downstream industries experiencing profit shrinks, such as DME. Influenced by soft demand, the DME prices ran at lows. Although the methanol price rise boosted its price to some extent, it also lifted the cost of DME. Thus, the overall profit declined.
On the whole, the industrial chain profit has rallied somewhat with the lasting uptrend of the methanol price, while the downstream industries have to face the challenges from the higher cost again, which will be a drag to the uptrend of the methanol price in the near term.
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