China’s Methanol Market Standing at a Crossroad

From late June to early July, the freight fluctuated quickly in the inland methanol market, and the coastal market also witnessed frequent changes in the discharge ports of imported cargoes, which drew the players’ close attention.

The sales at methanol producers were smooth, so the downstream users and traders were active in finding vehicles for transporting methanol. Consequently, the freight rose sharply by RMB 40-50/mt. In addition, the traders who went bottom-fishing before also intended to lift the prices by virtue of higher freight. However, with the feedstock prices rising persistently, the profits at MTBE, formaldehyde, methylal and DME plants shrank heavily, especially the DME producers and the MTO plants in the coastal areas. Due to the downstream resistance, the bidding prices at the downstream plants in northern Shandong fell back to around RMB 2,760/mt. As a result, the freight dropped by RMB 30-40/mt last weekend.

Considering the high prices and the lack of tank capacity in some storage areas, some foreign suppliers and methanol buyers (traders and downstream plants) adjusted the discharge ports of imported cargoes.

After the continuous methanol price rises last week, the profits at downstream plants have shrank sharply. The market players are wondering whether the methanol prices will increase further despite of the awkwarddownstream situation or decline moderately to narrow the price spread with downstream products. The future import situation at ports, the sales of inland resources and the price spread between upstream and downstream products are all influencing factors. China’s methanol market is standing at a crossroad, and SCI will keep an eye on the market trend.