Influence of 2020 Spring Festival on China Methanol Market
2020’s Spring Festival came at 25th Jan. How did the holiday this year affect China’s methanol market? Here’re some ideas.
In the Spring Festival holiday, China’s methanol producers kept normal production, so they had accumulated some methanol inventory. However, after the holiday, the logistics didn't recover, so the inventory at methanol producers increased gradually. At present, a large number of methanol producers are preparing to cut the methanol production, and some may even shut the units later with poor logistics condition.
The unsmooth logistics influenced the supply of coal to some extent. According to SCI, as of January 30, most coal mines in major producing areas stopped production for a holiday. A few coal mines mainly sold the inventory. The restarting time of coal mines in Yuyang, Shenmu, Zhunqi and Lvliang was delayed and the restarting time was uncertain. According the market, some methanol producers began to decrease the operating rate at the beginning of this week as there were few coal mines resumed production and the transportation was blocked. The methanol daily production declined by around 13.8%. Besides, the local methanol producers were forced to cut production because the feedstock supply was curbed.
As for the downstream enterprises, although the restarting time of some downstream enterprises like formaldehyde and DME enterprises was delayed, some large-scale enterprises like MTO and refining enterprises kept normal production. According to SCI, some downstream enterprises had sufficient feedstock supply during the Spring Festival holiday. In addition, some downstream enterprises purchased on a rigid demand in the surrounding markets.
Methanol’s downstream enterprises are bothered by the limited feedstock and the high product inventory. For instance, SCI has heard from several MTO producers and independent refineries in Shandong that they’re now running at 70% loads due to the limited logistics of their products. What’s more, due to the limited logistics, the mid-stream traders of China’s methanol industrial chain are also inactive. A large number of them chose to keep waiting.
Generally, the limited logistics affected China’s methanol industry from different aspects but mainly the negative ones on demand. Player shall pay more attention to the operating rates of producers in both upstream and downstream industries.
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