Inland Methanol Price Rise Hindered After Peaking
In March, China’s methanol market saw two rounds of obvious price rises. Up to March 31, the monthly average price was RMB 2,599/mt, up 21.77% from last month. However, after climbing to a high level, the market came under downward pressure.
Considering the scheduled unit overhauls in March and April, some methanol plants in the major producing areas were not willing to sell at low prices. With market resources decreasing, some inland traders had to purchase to meet short-covering demand. Purchase cost went up, followed by market prices.
However, downstream demand weakened gradually in H2 March. On the one hand, downstream users showed resistance to high methanol prices and just purchased on rigid demand. On the other hand, traders held wait-and-see attitudes, given recent logistic issues.
Currently, traditional downstream demand is affected to some extent, while the demand from the olefin industry is relatively stable. The newly added MTP unit at Xinjiang Hami Hengyou this year has reduced the resources in surrounding markets, but the influence to market prices is relatively limited against current high operating rates. Players should pay attention to the process of the MTO units at Gansu Huating and Tianjin Bohua. As for the spring overhaul, its support to the market also needs to be strengthened. First, the number of overhauls can hardly maintain methanol prices to stay at current level. Second, the overhauled units are scattered, leading to different mentality of producers in each region. Third, the overhaul time of some units have been delayed somewhat.
Although the inland methanol plants have destocked in H1 March, but the low inventory can hardly last due to weakening demand and below-expectation supply reduction. If the scale of overhauls still fails to meet market demand, the expansion of price spread among each region will be inevitable.
Overall, SCI reckons that for it is inevitable for current inland market to see temporary price decline, and the key is to take the initiative to in market sales. And for the coastal market, it is also the only way to offset some negative influences through expanding market sales with short-term price reductions.
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