Recent market review
As of the end of May, the domestic methanol market is divided into two ends: the mainland methanol shock fell, and the port methanol rose after a broad correction. Northwest Logic - The rapid expansion of coal-to-methanol profits has limited the manufacturers' willingness to spring inspection, and the maintenance of equipment in the main production area has led to the mismatch of market supply and demand, thus keeping the price high and firm. However, some MTO enterprises have strong resistance to the high price of methanol, and many MTO factories have reduced production and negative and advanced maintenance under the squeeze of profits, and the demand has weakened, and the market price has come under pressure. Therefore, the maintenance of the equipment in the production area did not lead to a surge situation; Port logic - Due to the impact of overseas equipment maintenance and geopolitical conflicts, the initial foreign ship arrivals did not meet expectations, and the domestic trade supplement unexpectedly decreased, the port inventory dropped to a low level, pushing the price gap with the mainland to expand, and the arbitrage window opened. With the end of the replenishment in the middle of the month, the foreign ship arrivals are expected to have a significant rebound, and under the background of the shutdown of large olefin plants such as Hxing-Hxing-Energy and Cheng Chi I. Spot basis high fall.
Specifically, in May, the methanol market opened high and fell, especially after the second half of the year, the market trend differentiation was obvious, the port price was strong and volatile, and the mainland market continued to run weak. At the beginning of the month, with the parking of several large units in the main production area, the supply in the region decreased, and the return after the holiday, there was a replenishment demand in the downstream. Supported by the good supply and demand, the market went up. However, with the continuous increase in the price of methanol, the profits of the downstream industry were compressed, most operators clashed with high prices, and the transaction atmosphere was weakened. And the futures plate high fall, the market price has been lowered; In the second half of the year, with the restart of the early maintenance device, the contradiction between supply and demand in the mainland was highlighted, the methanol market continued to be under pressure, upstream factories were more than streaming auction, downstream market replenishment enthusiasm was not high, and the spot market was widely lowered; However, the trend of the port and the mainland is differentiated, in May, some overseas methanol units were unplanned parking, the import of cargoes decreased, the disk was forced to bear the market again under the low inventory state, the futures plate was adjusted after the high level of operation, the port spot was adjusted with the plate, and the regional trend of the methanol market was obvious.
Commissioning of methanol and downstream units in 2024
Up to now, the total domestic methanol production capacity has exceeded 100 million tons, and the output has reached 84 million tons. Since 2019, the methanol production capacity has shown a steady growth trend. In recent years, China's methanol industry has developed rapidly, and China has maintained the largest methanol production capacity in the world. In 2024, China still has 8.65 million tons of production capacity, of which 1.15 million tons have been put into production, 7.5 million tons to be put into production, it is worth mentioning that a large methanol plant in Inner Mongolia supporting 2 million tons of MTO, if the supporting equipment can operate normally by then, the overall impact on the market is limited. In addition, it is necessary to pay attention to whether it is inverted driving when it is put into production and its phased impact on the market.
From 2019 to 2023, China's methanol consumption has shown an increasing trend year by year, and the olefin industry has occupied half of the downstream demand for methanol for several consecutive years, followed by methanol fuel, formaldehyde, acetic acid, etc. Since 2021, the downstream growth rate has slowed down year-on-year due to the impact of public health events and national environmental protection policies. However, in 2024, about 8.2 million tons of downstream units represented by formaldehyde, acetic acid and BDO are planned to be put into operation, of which 2.04 million have been put into operation and 6.23 million have not been put into operation, and the total demand for methanol is about 9.74 million tons. Without superimposing other factors, if the upstream and downstream units can be put into production as scheduled, the overall demand for methanol in the later stage is expected to increase.
outlook
Macro, although the state has introduced some favorable policy support for real estate, but the tone is difficult to reverse, downstream demand is difficult to boost, and later on clean energy, green environmental protection policies, need to pay attention to follow up.
At the cost end, the price of raw coal continued to fluctuate higher in May, the price of purchased coal by large groups boosted the market, the national temperature rose, the summer peak was approaching, the downstream replenishment was released, and the overall price was strong. In terms of natural gas, the expectation of maintaining high international oil prices in 2024 is more mainstream, so the cost and pricing plan of domestic natural gas will not change significantly compared with last year, and the cost side support of methanol is acceptable.
According to statistics, in June, nearly 6 million tons of early maintenance equipment in the northwest main producing areas returned, but the planned overhaul involved only about 2 million tons of production capacity, and the construction in June was stronger than in May, and the mainland supply showed a high pattern; In terms of imports, the construction pattern of installations in mainstream import areas such as Iran is similar to that in the mainland, with the return volume more than the loss volume, and the arrival volume in June is expected to rise to 1.18 million tons, but it is still not enough to make the port inventory significantly increase; On the demand side, the operating rate of the MTO industry in June is expected to be about 80%, although there is an increase, but the increase in the operating rate is mainly driven by the restart of methanol self-supplied olefin enterprises, and the impact on the overall demand is limited.
Overall, with the downstream demand affected by seasonal factors weak trend is difficult to change, the spot market supply strong demand weak pattern gradually highlighted, the market decline or difficult to reverse, is expected in June methanol market weak shock.
