Methanol Supply-Demand Fundamentals Expects to be Weak
May 23, 2018
China methanol price stayed firm in May. However, the port market performance weakened from May 18th, 2018 and the inland market performance in Shandong was soft.
On the one hand, methanol supply is expected to increase, with the previously-shut-down units in Central Shaanxi, Gansu and Xinjiang restarting and the arrival of imported shiploads. On the other hand, downstream demand is expected to be mute since the traditional downstream industries were in the off-peak season and some CTO units took maintenance. The price of most traded futures contract, for September 2018 delivery, declined to CNY 2,800/mt.
The run rate of China methanol industry showed upward tendency. Up to press time, the run rate of China’s methanol industry was 65.38%, up 4 percentage points from mid-April, and up 5 percentage points from early May. The run rate in Northwest China was 71%, up 6 percentage points from mid-May. Those in Shandong, North China and East China were 67%, 58% and 71%, respectively.
As for the units, the 900,000mt/yr methanolunits at Inner Mongolia Rongxin Chemical, Qinghai Guilu Chemical and Tianjin Soda Plant were on the way of restarting. The 600,000mt/yr methanol unit at Changwu Chemcial had restarted. The 600,000mt/yr unit at Shenhua Ningxia Coal will restart in recent days.
As for the imported goods, about 16,000mt imported shiploads will arrive at East China ports by the end of May. That at South China ports is estimated to be 15,000mt-20,000mt. Thus, more tradable goods will be available at China ports. In June, some Iran-and New Zealand-origin goods will arrive China ports, which will further increase the methanol supply at ports.
As for newly-constructed units, methanol products have been available from the methanol unit at Anhui Haoyuan Chemical and the start-up time for ENN Energy’s new methanol unit has been put off to June. The total capacity of newly-added capacity from January to May of 2018 reached 1.2 million/yr. No new units were put into production in the overseas market. JLC will keep track with the new units in Iran and U.S.
The run rates of downstream DME and MTBE markets underwent little changes. However, the operating rate of downstream CTO industry plunged. That of the formaldehyde industry declined by 3 percentage points from end April. The run rate of acetic acid industry inched down, amid unit overhaul and good profit.
In short, the supply-demand fundamentals of China methanol industry will weaken. Thus, market insiders should be aware of the operation risk.