Analysis on main products of methanol industry chain in May
June 20, 2018
Shandong(JLC), June 20, 2018–The most traded methanol contract MA1809 decreased after increasing in May, with May 17th being the watershed. Before May 17th, imported methanol price advanced at ports due to tight supply, low inventory level and low import volume. Spot price moved up to CNY 3,500/mt gradually, and futures price rose to CNY 2,888/mt, which was the highest price since the beginning of 2018. There was less paper goods delivery amid little import volume. Besides, increasing crude oil price, environmental protection supervision and US quitting the Iranian nuclear deal exerted more pressure to coking industry. For spot market, following the price gain at ports, inland market price advanced to CNY 3,000/mt in mid month. From mid-to-late month, run rate of olefin industry moved down below 60% amid more supply and sparse demand. Supply and demand fundamentals were weakening, and both spot and futures prices fell. The price fall from May 17th-25th was basically equal to the price gain from May 7th-17th. Up to May 30th, the most traded methanol contract MA1809 closed at CNY 2,719/mt, which was lower than the price on May 5th. Early this month, price spread between spot and futures was around CNY 594/mt, and price spread reached the peak value of CNY 717/mt on May 9th. Afterwards, price spread fell gradually. By the end of May, price spread went range-bound around CNY 390-411/mt.
Formaldehyde price in China rose in May 2018 amid increasing feedstock price. Up to end April, the prevailing prices in Shandong and Hebei were CNY 1,450-1,700/mt and CNY 1,3501,560/mt, respectively. Run rate of formaldehyde industry was 33%, down 2% MoM. Sources said that run rate in South Shandong might move down from the end of May to June 5th.
China’s DME market price increased in May 2018 amid advancing international crude oil price, rising LNG price, and MTO units restarting. Up to late May, DME market price fell gradually amid plunging international crude oil price and mute market sentiment. Price spread between DME and LNG was little. Although there was still profit crisis, some industries decreased selling price due to costs and selling pressure.
China’s acetic acid market price soared over CNY 5,000/mt in May 2018 mainly due to tight supply, hitting 10-year high. One the one hand, many units took maintenance. On the other hand, the export volume was large, and according to rough statistics, export volume in May would reach 70,000mt. Celanese in Taiwan, Dalian and Singapore shut down due to force majeure before International Labour Day, leading to more export orders. Moreover, China’s rigid demand was high. Although there were PTA unit overhauls, demand for acetic acid decreased slightly. Coupled with newly-added PTA units and 70-80% run rate of PTA units, demand for acetic acid increased obviously from last year.
China’s DMF market price stepped down in May 2018. Main DMF producers operated steadily and spot supply was normal. Thereinto, the 100,000mt/yr DMF unit of Shandong Luxi Chemical shut down for 20-day maintenance in the month, which had limited influence on the market. Supply and demand fundamentals weakened in the week. Supply was sufficient but downstream demand was sparse. DMF consumption was suppressed by end users’ sparse demand. Coupled with the influence of environmental protection, some downstream factories in Shandong and North Jiangsu shut down, and downstream demand declined further. DMF producers declined offers amid selling pressure, and negotiated price decreased gradually.
China’s MTBE price decreased after rising in May 2018. Specifically, international crude oil futures price jumped in early May and supported MTBE traders’ sentiment. MTBE producers hiked offers due to advancing costs of mixed C4 and etherified C4. Thus, downstream users consumed their previously-stocked MTBE instead of purchasing from the market, which suppressed the MTBE market price growth. In mid May, international crude oil futures price rose slightly, and the wholesales price of refined products moved up, which boosted the MTBE market sentiment. With inventory level standing at low-to-mid levels, refineries raised EXW offers amid downstream plants’ stock-replenishing purchase. In late May, crude oil and gasoline prices rose. Producers hiked their quotes further, but downstream demand continued to be weak in North China’s market. Market price increased limitedly but oil blending enthusiasm was restricted by tax ticket policy. Afterwards, producers’ EXW quotes plunged amid plummeting crude oil price, wait-and-see sentiment and sparse transactions.
DMC market price declined after rise in May. In early May, producers stood firmly by their quotes in transactions supported by rebounding price of feedstock propylene oxide, low inventory levels and unit overhaul plans. Afterwards, DMC price kept decreasing amid falling feedstock PO price, sparse DMC market demand, and decreasing paint and coating demand. Up to the end of May, DMC EXW price in Shandong was CNY 5,600-5,700/mt (acceptance). Traders’ quotes in East China was CNY 5,700-5,900/mt (acceptance, delivery). Market price in South China was CNY 6,000-6,200/mt (cash, delivery).
China’s propylene price was stable-to-rising in May. The prevailing market price in Shandong stood at CNY 8,000-8,650/mt. Early this month, the market was lack of directions. Afterwards, the propylene supply in North China decreased caused by the unsteady operation of a propylene unit, thus downstream users shifted to purchase propylene from Shandong. Thus, the propylene price in Shandong inched up. Around the mid-May, international crude value and PP futures price gained, pushing up the propylene price in China, followed by active sales.
Market prices of LDPE and LLDPE increased in early May, but declined gradually in the second half of May amid weaker demand and limited high-price transactions. In China, PetroChina Jilin Petrochemical, China BlueStar Shenyang Chemical, Sinopec Zhenhai Refining & Chemical and PetroChina Sichuan Petrochemical all shut units down for maintenance. Old LDPE unit at Sinopec Beijing Yanshan Company, LDPE unit at PetroChina Lanzhou and LDPE251 production line at Zhongtian Hechuang Energy were shut for equipment failure. Shaanxi Yanchang Coal Yulin Energy and Chemical planned to shut unit down on May 30th. Maintenance plans above-mentioned led to tight supply of some PE products, driving up LLDPE and LDPE prices in early May.
In May, China PP Raf. price moved sideways after slight increase. In early May, the bullish sentiment made most branches of PetroChina and Sinopec continue raising offers, underpinning the market quotation. PP market prices increased generally amid bullish speculation atmosphere. Along with the increase of PP futures price, the downstream buyers became reluctant to accept high-price resources, restricting the trading volume and price increase. In late May, PP inventories of PetroChina and Sinopec transferred to social inventory. Traders and terminal users both held high inventories affected by the off-peak season. The market price moved sideways accordingly.