South China Methanol Market to Keep Firm

Recently, the methanol prices rose quickly in South China, which reached a two-month high on April 18 and then fell back slightly. However, the stable downstream demand and limited imported arrivals may continue to support the market in the near term.

The stable demand was the major driving factor for recent price rises in South China methanol market. Entering April, local major downstream industries maintained stable operation, including formaldehyde, dimethoxymethane, acetic acid and MTBE. In addition, the coating and solvent plants also consumed some methanol resources.

As for the supply, the volume of imported arrivals was relatively high in H1 April, and the downstream users purchased cautiously. Thus, the methanol prices slipped somewhat. However, the import volume began to decline in H2 April, and the inventory was consumed quickly. In addition, with the crude oil prices advancing, the downstream sentiment began to change. The methanol suppliers raised offers, and the sales were smooth amid bullish sentiments. The dealing prices kept rising from April 13 and reached a high point on April 18. Afterwards, the downstream purchasing interest weakened with the cost pressure increasing. The methanol prices began to fall back in response to the profit-taking at some suppliers.

Although the prices have dropped somewhat, SCI considers that the stable downstream demand and limited imported arrivals may continue to support the South China market in the near term. The mainstream prices may fluctuate around RMB 3,100/mt.