During the "Golden Nine Silver Ten" period, the methanol market showed a fluctuating upward trend
2023/8/30
1、 Review of Methanol Market
1. Review of price trends
The average price from September to October 2022 was significantly higher than that from July to August 2022, and the "golden nine silver ten" effect of methanol was relatively obvious. The main reason for the price increase from September to October was due to the seasonal changes in coal prices on the cost side. As the weather cooled, the demand for coal increased; On the other hand, there are changes in the supply and demand side. The autumn inspection plan for some devices on the supply side is generally focused on the relatively suitable weather from September to October, while the demand side gradually enters the peak season and is generally facing good conditions.
2、 Fundamentals Review
1. Supply side review:
1) Import
This year, especially since May, there has been a significant increase in imports. It is expected that imports will remain at a relatively high level in the second half of the year, and the overall import volume may increase significantly compared to last year. The specific import changes still need to pay attention to the changes in port olefin devices.
2) Domestic supply
Since the end of June, methanol production and capacity utilization have shown a fluctuating upward trend, and in late August, the capacity utilization rate exceeded 80%, reaching the highest point since the beginning of this year. From September to October, methanol will undergo autumn inspections. However, due to the high intensity of spring inspections this year and the current acceptable profits, the autumn inspections may be weak, and the methanol supply may show a fluctuating upward trend in the later stage.
2. Requirement Review
Downstream olefin profits have significantly recovered from February to March, with a narrow margin of consolidation and operation from April until now. Methanol fluctuated and rose mainly from July to August, but the degree of olefin growth is limited, and profits are still at the low level in recent years. Long term losses may have a certain impact on the operation of methanol to olefin units in the later stage; Under the driving force of positive terminal demand, formaldehyde has made some repairs to losses, and there is a possibility of fluctuations in construction or inventory; Dimethyl ether and glacial acetic acid are also in the profit recovery channel, but their impact on methanol prices is limited. Overall, the demand is expected to be positive, but attention needs to be paid to downstream profits.
3. Profit Review
From the perspective of profit changes, from January to March, due to the decrease in coal prices, there was a significant process of repair for coal to methanol. However, due to limited cost changes, the price of methanol from natural gas to methanol continued to decline from February to June, leading to increased losses and some impact on the operation. From July to now, methanol prices have fluctuated and increased, while coal prices have been operating in a narrow range. Natural gas prices are still operating steadily, and both processes have profits in the repair channel. The sustained restoration of profits has promoted the resumption of the operation of methanol plants.
4. Inventory
From the perspective of inventory, the port inventory is currently in the accumulation channel, with a high level of inventory, which slightly suppresses the price inventory in the port area. However, the fluctuation of low to medium level inventory in mainland China is mainly driving the market inventory to some extent.
3、 Summary and Future Prospects
From a cost perspective, since the significant decline in coal prices this year, they have maintained a volatile operation. At present, their impact on the market is limited. After the weather turns cold, coal demand has increased, and there may be room for price increases, but they may still maintain a rational position.
From the perspective of supply, the utilization rate of methanol production capacity is relatively low this year. However, due to the improvement in methanol profits recently, the operation of methanol plants is gradually recovering. However, attention needs to be paid to the intensity of autumn inspections this year, and it is expected that supply will continue to increase in the future.
From a demand perspective, the Ningxia Baofeng olefin plant is expected to be put into operation, with demand entering the peak season and downstream construction gradually recovering. However, attention needs to be paid to the downstream profit recovery situation. If there is insufficient downstream follow-up or there are certain restrictions on downstream construction.
Overall, the overall mentality of the future market is improving, with the macro level still being relatively strong. Cost changes are limited, and both supply and demand may increase. Demand increases may be stronger than supply increases. There may be differences in inventory trends between mainland China and ports, or to some extent, it may limit price fluctuations. Overall, positive news outweighs negative news. It is expected that during the "Golden Nine Silver Ten" period, the methanol market will show a fluctuating upward trend, but the increase may be limited to some extent.
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