Around mid-June, the methanol prices in the coastal areas experienced a short rebound, supported by the futures price jump, tight merchantable resources, restocking on rigid demand and intensive overhauls of foreign important units. The methanol prices in Jiangsu once rushed to RMB 2,440/mt. whether the market will continue the uptrend, here SCI will make a brief analysis from the perspective of the operation and feedstock inventory status at downstream plants.
At present, in the Chinese coastal areas, most MTO, acetic acid, formaldehyde as well as DME plants have comparatively sufficient feedstock inventory. Meanwhile, contract goods are arriving gradually. Therefore, they are not eager to purchase methanol in large amounts, and most are consuming the former inventories.
Specifically speaking, the rainy season in the south and the traditional demand off season curb the operation of downstream formaldehyde plants. The BRIC Summit will be held in Xiamen in September. Consequently, the environmental protection inspection in South China will greatly influence local alcohol ether demand. Crude oil prices keep falling, resulting in strong bearish sentiments. Sinopec has stopped outsourcing gasoline since June, so the demand for MTBE declined. The MTBE market is sluggish. In addition, some DME plants also plan to cut operating rates. Most methanol downstream products face shrinking profit. Recently, the profits of acetic acid and MTBE are RMB 100-180/mt, while those of formaldehyde and DME are negative RMB 7-15/mt and RMB 100-150/mt. For the MTO production, the profit of the ethylene line is relatively considerable with the theoretical profit at RMB 350-1,890/mt, while that of propylene line is still thin. On the whole, the methanol demand can hardly improve in the near term.
As for the supply, SCI estimates that 197.7–200kt of imported methanol will arrive at ports from end-June and H1 July. In such a climate, profit-taking activities may weigh down the methanol market in the coastal areas, and local methanol prices may enter a downtrend again.
Remarks: Please check the original article for more data and charts.