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Next year, the growth rate of methanol supply will slow down, and demand will become more diversified
2023/12/26
1、 Market Review: The trend of methanol follows cost fluctuations and shows a "V" shape overall
In 2023, methanol showed a V-shaped trend overall, with a fluctuation range of 1953-2818 yuan/ton in futures prices. In the first half of the year, the Spring Festival was the main turning point, with strong expectations for domestic economic recovery before the holiday. At the same time, methanol port inventories were low, and methanol fluctuated upwards to a high of 2818 yuan/ton within the year; The expectation of post holiday recovery has fallen short, while energy prices have significantly fallen, putting pressure on the chemical sector to decline. In addition, the high production of methanol in mainland China, coupled with the continuous increase in import volume, has resonated with the cost side and fundamentals, causing methanol to fall from its high level and enter a downward adjustment. The lowest point reached 1953 yuan/ton, breaking the low point in nearly three years, until it gradually stabilized in mid June. At the end of June, Iran raised natural gas prices, while coal began its peak summer season and frequent mine safety accidents increased safety inspections, leading to a rebound in coal prices and increasing cost support. Subsequently, the restart and production of large MTOs further boosted market sentiment, and methanol began to rise and recover, with a focus on reaching the 2500 level. Since late September, methanol has been supported by macro and winter gas restrictions, while high imports and negative demand feedback have suppressed it. After falling back, it has gradually entered a volatile market.
The trend of methanol spot prices in 2023 is basically consistent with futures. In the first half of the year, the port basis was mostly in a rising state, reaching a highest level of 177 yuan/ton. In June, with the rebound of futures, the basis quickly fell, reaching a minimum of around -70 yuan/ton. Currently, it fluctuates around the normal level and remains stable compared to the beginning of the year.
2、 Cost side: Limited space below coal prices, with little change in natural gas prices
As the main raw material for domestic methanol production, coal prices have a significant correlation with methanol prices, and the trend of methanol is driven by the cost side. In 2023, domestic coal prices first decreased and then increased. In the first half of the year, domestic coal supply remained at a high level. At the same time, imports were opened up and the supply of goods was stable at ports. Port coal inventories remained stable and rising, and overall coal supply was relatively loose. Coal prices fluctuated and weakened. In the second half of the year, with the seasonal demand for thermal coal increasing, industrial demand rebounded, and non electric profits repaired the demand increment. At the same time, the tightening of supply side safety supervision led to limited production release, Coal prices have stabilized and increased. Due to a significant decrease in coal prices in 2023 compared to last year, the profit margin of coal to methanol has improved, with an average annual value of about -170 yuan/ton, which has narrowed the losses compared to last year. Overseas production facilities are mainly based on natural gas, and the global natural gas crisis has eased. In 2023, the focus of natural gas prices has shifted downward, operating in the overall range of 2-4 US dollars/MMBtu. The cost of overseas methanol production has also decreased, with an average annual cost of about 1500 yuan/ton, a year-on-year decrease of 23%. It is worth noting that under the expectation of regular winter gas restrictions, natural gas prices did not rise but fell in November and December 2023, forming a significant contrast to previous market trends. Therefore, the scale of natural gas restrictions this year is lower than expected.
Looking ahead to 2024, there is still support from the energy side for methanol. As a benchmark for coal gasification, the correlation between methanol valuation and coal price trends is still strong. Under the constraints of the dual carbon policy and the normalization of security checks, the incremental release of coal mine production capacity may be limited, and the growth rate of coal supply may fall. However, as the domestic economy gradually recovers, the demand side may have stronger resilience, and it is expected that coal prices will perform relatively strongly, with limited space below. In terms of natural gas, fluctuations in natural gas prices will have a certain impact on overseas methanol production facilities. The growth rate of global natural gas production will slow down in 2024, but it will continue to increase. It is expected that global production will be about 45 million tons, with a year-on-year growth rate of 2.7%. However, the growth rate of demand is relatively limited, and supply and demand will turn to be loose. Gas prices lack upward driving force, and it is expected that the price center will be similar to 2023, with some support in winter, However, attention should be paid to whether supply side disturbances and seasonal changes in 2023 will continue.
3、 Supply side: Domestic production capacity growth slows down, and the impact of high import volume continues
1. The growth rate of supply is slowing down, and the optimization of existing equipment is accelerating
In 2023, the total domestic methanol production capacity will be about 107 million tons, with a year-on-year growth rate of about 4.97%, of which the coal to methanol unit will still take the first place, and the coke oven gas to methanol production capacity will increase significantly, accounting for 14%. In addition, the carbon dioxide hydrogenation to methanol, that is, green alcohol project, will increase by hundreds of thousands of tons, and the production process will tend to be low-carbon. The cumulative production from January to November was 76.6938 million tons, a year-on-year increase of 3.22%. In the first half of the year, excluding routine spring inspections, the profit loss of coal to methanol production led to a continuous low start, with monthly production lower than the same period last year; In the second half of the year, with the recovery of profits and the release of new production capacity, production gradually rebounded, reaching a nearly three-year high of 85.49% in mid October. Subsequently, due to factors such as maintenance, environmental protection and security checks, and winter gas restrictions, production slightly declined, but still maintained a high level for the same period. The average annual operating load was 77.78%, slightly higher than last year.
Looking ahead to 2024, benefiting from the "dual carbon" policy, the transformation and upgrading of the methanol industry, the pace of device optimization, and the gradual elimination of outdated production capacity have been accelerated. The proportion of new production capacity such as coke oven gas production and carbon dioxide hydrogenation production has increased, and many large-scale devices have supporting downstream facilities. The actual supply increment that affects market circulation is about 2 million tons, with a growth rate of 2%, and the impact on the spot market is limited. In addition, it is necessary to pay attention to the progress of future green alcohol projects. China has planned to construct multiple green hydrogen to methanol projects, among which the Bayannur new energy hydrogen production project and Baofeng Energy's "green hydrogen+coal" to olefin project have green alcohol production capacity of millions of tons. If all projects are put into operation and fulfilled, the new annual production capacity of green alcohol can reach 6.21 million tons/year.
2. There is a significant increase in overseas production capacity, but the domestic market still faces high import volume shocks, and high port inventories may become the norm
The growth rate of methanol imports in 2023 is significant. Since May, the monthly import volume has exceeded 1.2 million tons. The cumulative methanol import volume from January to October reached 13.2694 million tons, a year-on-year increase of 18.21%, which is a new high in the past three years. On the one hand, since the recovery of Iran's methanol plant in the first quarter, overseas methanol production has rebounded, with an average annual production of about 72.94%, a year-on-year increase of 3.92%. In addition, with the further release of methanol production capacity outside Shanghai, there has been a significant increase in overseas methanol production; On the other hand, weak demand in Europe and America, coupled with sanctions and other factors, has led to a shift in the supply of goods to the European and American markets to China for sales. From the perspective of the proportion of import source countries, the Middle East is still the main source of imports, but non Iranian sources have also increased. Russia has grown rapidly. In addition, due to the opening of the price difference between China and the United States in the third quarter, methanol from the United States appeared for the first time, accumulating around 50000 tons. With the influx of a large amount of methanol into the domestic market, the potential pressure on port inventory has intensified. The average methanol port inventory in 2023 is about 910000 tons, a year-on-year increase of 9%.
Looking ahead to 2024, as the world's largest consumer of methanol, China still faces the impact of imported goods. Except for seasonal shutdowns in the first quarter, the operation of overseas existing facilities is basically stable. The annual changes in domestic import volume are closely related to the progress of new foreign production capacity. The new production capacity is concentrated in Iran and the United States. According to the plan, Iran will have two sets of 1.65 million ton methanol facilities, and the United States will have a total of 3.2 million ton facilities. In addition, Malaysia also has a 1.75 million ton facility planned to be put into operation in 2024. Therefore, while import profits still exist and overseas production is relatively stable, coupled with a large increase in production capacity, China still faces high import volume shocks. High port inventories may become the norm, or promote the backflow of imported methanol to the mainland market. However, factors such as overseas gas supply and changes in internal and external price differentials need to be considered.
4、 Consumption structure may gradually adjust, and demand tends towards diversified development
1. Due to the suppression of dual carbon and economic factors, it is difficult for MTO to have new increments
In 2023, the apparent demand for methanol is expected to reach 91.08 million tons, with a year-on-year growth rate of about 4.6%. The domestic downstream is still mainly focused on methanol to olefins, with a consumption of about 47 million tons of methanol, accounting for about 52%. Olefins have shown a weak and then strong trend throughout the year. From January to August, due to poor profits, the operation of external extraction units was relatively unstable, with frequent maintenance and shutdowns. At one point, shutdown units accounted for about 45%, and production was significantly lower than the same period in previous years. After August, with the restart of Silbon and Xingxing, the production of Baofeng Phase III was fulfilled. In addition, the continuous external procurement of CTO drove an increase in demand for olefins, leading to a significant rebound in production, gradually climbing over 90%, reaching a new high for the year. Although there was a slight decline in production in the fourth quarter due to the shutdown or load reduction of some units such as Changzhou Fude, it still remained at a high level for the same period.
Looking ahead to 2024, the current olefin profits are approaching breakeven, and the operating rate of the equipment has basically been fully utilized, with limited potential for future growth. The domestic olefin production capacity has exceeded 18 million tons, gradually entering the stage of overcapacity, and the enthusiasm for device production has decreased. As a high-energy consuming industry, coal chemical industry is currently under the dual pressure of dual carbon and economic efficiency, and there are no new olefin production projects in China. In addition, in recent years, propane dehydrogenation, ethane cracking, and large-scale refining facilities in coastal areas have continued to be put into operation. In addition, olefin monomers and polyolefins are also in a period of overcapacity, and the price center is constantly shifting downwards. The economic efficiency of outsourcing olefin monomers is significantly better than outsourcing methanol to olefins. Therefore, it is expected that olefin enterprises with conditions in the later stage may switch to outsourcing monomers to produce terminal products to alleviate their comprehensive profits, and the MTO process will face substitution risks, There is a possibility of phasing out outdated production capacity, and there may be a stock game in the future, which may limit the increase in demand for methanol.
2. Traditional downstream performance shows significant differences, and MTBE and acetic acid will bring certain increments
In 2023, traditional downstream demand has increased, with a demand for methanol of approximately 17.8 million tons, a year-on-year increase of 6.4%, accounting for 19.5% of the methanol downstream. The traditional downstream weighted average operating rate has increased, but the performance of the varieties varies. Among them, MTBE is one of the more eye-catching products that refineries must support. In recent years, with good gasoline profits, the demand for blending oil has increased, and benefiting from the adjustment of the gasoline consumption tax collection scope announced in June, MTBE is not included in the category of consumption tax collection for gasoline blending, further increasing the market demand for MTBE, From January to October, the apparent demand for MTBE in China reached 8.85 million tons, a year-on-year increase of 5.7%. In addition, due to the shortage of overseas oil transfer in 2023 and the significant arbitrage potential in exports, the cumulative MTBE export volume from January to October was 1.4204 million tons, a year-on-year increase of 12.76%. High demand promotes profit recovery, with theoretical annual production profits exceeding 1000 yuan/ton, accelerating new investment projects and resuming production of some long-term shutdown devices. MTBE production has significantly increased compared to previous years, and it has also increased in the opposite season in the fourth quarter. The annual demand for methanol is about 5.48 million tons, accounting for 6% of the total demand. In the remaining downstream, driven by the growth in demand for downstream PTA, vinyl acetate, and other products, acetic acid is still in a stage of high production capacity growth. A total of 1.3 million tons of new production capacity were put into operation within the year, with a total production capacity of 12.06 million tons, a year-on-year increase of 13%. Although the profit level has narrowed to some extent, it is relatively good in traditional downstream, so the operating rate is basically the same as last year. The annual consumption of methanol is about 5.48 million tons, accounting for about 6% of the total methanol demand. Formaldehyde and dimethyl ether have not shown significant improvement yet. In the sluggish environment of the real estate industry, the growth rate of formaldehyde production capacity has slowed down. In 2023, formaldehyde production capacity reached 36.8 million tons, a year-on-year increase of 2.66%, and the annual average operating rate has declined to 41.95%, which is at a low level in nearly three years. The annual consumption of methanol is about 4.56 million tons, accounting for about 5% of the total methanol demand; Dimethyl ether, on the other hand, is subject to policy restrictions. Due to stricter inspection of LPG blending, production has continued to be sluggish. The annual consumption of methanol is about 2.28 million tons, accounting for about 2.5% of the total methanol demand.
Looking ahead to 2024, traditional demand is more influenced by the transmission of economic recovery progress to the consumer side. Under policy stimulus, domestic demand growth may show weak recovery, and external demand is also worth looking forward to. Traditional downstream may bring some rigid demand, but there are certain differences between varieties. Based on the economic feasibility of MTBE as a gasoline blending component, MTBE demand is expected to continue to grow. Driven by high profits and high surface demand, there will be an increase in new MTBE investment devices in 2024, A total of 1.35 million tons; At present, acetic acid enterprises still have profits and the average production has not declined. Ice acetic acid still has plans to invest in new production capacity. It is expected that a total of 1.8 million tons of new production capacity will be put into operation in 2024, and both large units are planned to be put into operation in the first half of the year. There may be supply and demand mismatch caused by the production pace; The dimethyl ether and formaldehyde industries are in the stage of capacity replacement and clearance, making it difficult to achieve significant growth. Overall, traditional downstream demand support for methanol still exists, and MTBE and acetic acid will bring a certain increase.
Under the background of industrial green transformation, demand tends towards diversified development
Under the national strategic goals of low-carbon and environmental protection, benefiting from the development of the new energy and new materials industry, the emerging downstream methanol hydrogen production, methanol fuel (for vehicles and ships), as well as green and environmentally friendly products such as organic silicon and BDO, have performed quite well in 2023. Among them, the demand for methanol in emerging downstream organic silicon and BDO has steadily increased, reaching 2 million tons and 1.83 million tons respectively, accounting for 2.4% and 2.22% respectively; Due to its good cleanliness and efficiency, methanol fuel has lower costs and is more convenient to install compared to liquefied natural gas. It has risen to about 15% of methanol consumption, and the number of global methanol ship orders is also increasing year by year. In 2023, the number of new orders for methanol fuel transport ships has reached 120, nearly three times the number of orders from last year.
Looking ahead to 2024, under the background of industrial green transformation, demand tends to diversify and some downstream industries may become new growth points, such as BDO, methanol fuel, etc. Although their current volume is relatively small, their production capacity growth rate may accelerate. Among them, as a key material for degradable plastics, with the continuous promotion of "plastic restriction orders", the demand for degradable plastics may continue to be stimulated, Driven by demand, the growth rate of BDO's new production capacity is accelerating. It is expected that around 2.7 million tons of projects will be put into operation in 2024, contributing 2.16 million tons of new methanol demand; In terms of fuel, with the promotion of environmental protection policies and the continuous development of new energy, coupled with the cost of converting traditional fuel to methanol being reduced by 30% compared to liquefied natural gas, the shipping industry is accelerating the process of energy transformation, and the promotion of using methanol ship fuel to replace traditional energy is steadily progressing. In addition, ship types such as bulk carriers, chemical tankers, and automobile transport ships have also begun to choose methanol power. The use of methanol as a clean and environmentally friendly energy source will become increasingly widespread, and it may become the most potential demand growth point in the downstream of methanol. It is expected that there will be over 200 methanol ships globally in 2024, which will bring about 6 million tons of methanol fuel demand.
5、 Summary
In 2023, methanol showed a V-shaped trend overall, with a fluctuation range of 1953-2818 yuan/ton in futures prices. In the first half of the year, the Spring Festival was the main turning point, with strong expectations for domestic economic recovery before the holiday. At the same time, methanol port inventories were low, and methanol fluctuated upwards to a high of 2818 yuan/ton within the year; The expectation of post holiday recovery has fallen short, while energy prices have significantly fallen, putting pressure on the chemical sector to decline. In addition, the high production of methanol in mainland China, coupled with the continuous increase in import volume, has resonated with the cost side and fundamentals, causing methanol to fall from its high level and enter a downward adjustment. The lowest point reached 1953 yuan/ton, breaking the low point in nearly three years, until it gradually stabilized in mid June. At the end of June, Iran raised natural gas prices, while coal began its peak summer season and frequent mine safety accidents increased safety inspections, leading to a rebound in coal prices and increasing cost support. Subsequently, the restart and production of large MTOs further boosted market sentiment, and methanol began to rise and recover, with a focus on reaching the 2500 level. Since late September, methanol has been supported by macro and winter gas restrictions, while high imports and negative demand feedback have suppressed it. After falling back, it has gradually entered a volatile market.
The trend of methanol spot prices in 2023 is basically consistent with futures. In the first half of the year, the port basis was mostly in a rising state, reaching a highest level of 177 yuan/ton. In June, with the rebound of futures, the basis quickly fell, reaching a minimum of around -70 yuan/ton. Currently, it fluctuates around the normal level and remains stable compared to the beginning of the year.
2、 Cost side: Limited space below coal prices, with little change in natural gas prices
As the main raw material for domestic methanol production, coal prices have a significant correlation with methanol prices, and the trend of methanol is driven by the cost side. In 2023, domestic coal prices first decreased and then increased. In the first half of the year, domestic coal supply remained at a high level. At the same time, imports were opened up and the supply of goods was stable at ports. Port coal inventories remained stable and rising, and overall coal supply was relatively loose. Coal prices fluctuated and weakened. In the second half of the year, with the seasonal demand for thermal coal increasing, industrial demand rebounded, and non electric profits repaired the demand increment. At the same time, the tightening of supply side safety supervision led to limited production release, Coal prices have stabilized and increased. Due to a significant decrease in coal prices in 2023 compared to last year, the profit margin of coal to methanol has improved, with an average annual value of about -170 yuan/ton, which has narrowed the losses compared to last year. Overseas production facilities are mainly based on natural gas, and the global natural gas crisis has eased. In 2023, the focus of natural gas prices has shifted downward, operating in the overall range of 2-4 US dollars/MMBtu. The cost of overseas methanol production has also decreased, with an average annual cost of about 1500 yuan/ton, a year-on-year decrease of 23%. It is worth noting that under the expectation of regular winter gas restrictions, natural gas prices did not rise but fell in November and December 2023, forming a significant contrast to previous market trends. Therefore, the scale of natural gas restrictions this year is lower than expected.
Looking ahead to 2024, there is still support from the energy side for methanol. As a benchmark for coal gasification, the correlation between methanol valuation and coal price trends is still strong. Under the constraints of the dual carbon policy and the normalization of security checks, the incremental release of coal mine production capacity may be limited, and the growth rate of coal supply may fall. However, as the domestic economy gradually recovers, the demand side may have stronger resilience, and it is expected that coal prices will perform relatively strongly, with limited space below. In terms of natural gas, fluctuations in natural gas prices will have a certain impact on overseas methanol production facilities. The growth rate of global natural gas production will slow down in 2024, but it will continue to increase. It is expected that global production will be about 45 million tons, with a year-on-year growth rate of 2.7%. However, the growth rate of demand is relatively limited, and supply and demand will turn to be loose. Gas prices lack upward driving force, and it is expected that the price center will be similar to 2023, with some support in winter, However, attention should be paid to whether supply side disturbances and seasonal changes in 2023 will continue.
3、 Supply side: Domestic production capacity growth slows down, and the impact of high import volume continues
1. The growth rate of supply is slowing down, and the optimization of existing equipment is accelerating
In 2023, the total domestic methanol production capacity will be about 107 million tons, with a year-on-year growth rate of about 4.97%, of which the coal to methanol unit will still take the first place, and the coke oven gas to methanol production capacity will increase significantly, accounting for 14%. In addition, the carbon dioxide hydrogenation to methanol, that is, green alcohol project, will increase by hundreds of thousands of tons, and the production process will tend to be low-carbon. The cumulative production from January to November was 76.6938 million tons, a year-on-year increase of 3.22%. In the first half of the year, excluding routine spring inspections, the profit loss of coal to methanol production led to a continuous low start, with monthly production lower than the same period last year; In the second half of the year, with the recovery of profits and the release of new production capacity, production gradually rebounded, reaching a nearly three-year high of 85.49% in mid October. Subsequently, due to factors such as maintenance, environmental protection and security checks, and winter gas restrictions, production slightly declined, but still maintained a high level for the same period. The average annual operating load was 77.78%, slightly higher than last year.
Looking ahead to 2024, benefiting from the "dual carbon" policy, the transformation and upgrading of the methanol industry, the pace of device optimization, and the gradual elimination of outdated production capacity have been accelerated. The proportion of new production capacity such as coke oven gas production and carbon dioxide hydrogenation production has increased, and many large-scale devices have supporting downstream facilities. The actual supply increment that affects market circulation is about 2 million tons, with a growth rate of 2%, and the impact on the spot market is limited. In addition, it is necessary to pay attention to the progress of future green alcohol projects. China has planned to construct multiple green hydrogen to methanol projects, among which the Bayannur new energy hydrogen production project and Baofeng Energy's "green hydrogen+coal" to olefin project have green alcohol production capacity of millions of tons. If all projects are put into operation and fulfilled, the new annual production capacity of green alcohol can reach 6.21 million tons/year.
2. There is a significant increase in overseas production capacity, but the domestic market still faces high import volume shocks, and high port inventories may become the norm
The growth rate of methanol imports in 2023 is significant. Since May, the monthly import volume has exceeded 1.2 million tons. The cumulative methanol import volume from January to October reached 13.2694 million tons, a year-on-year increase of 18.21%, which is a new high in the past three years. On the one hand, since the recovery of Iran's methanol plant in the first quarter, overseas methanol production has rebounded, with an average annual production of about 72.94%, a year-on-year increase of 3.92%. In addition, with the further release of methanol production capacity outside Shanghai, there has been a significant increase in overseas methanol production; On the other hand, weak demand in Europe and America, coupled with sanctions and other factors, has led to a shift in the supply of goods to the European and American markets to China for sales. From the perspective of the proportion of import source countries, the Middle East is still the main source of imports, but non Iranian sources have also increased. Russia has grown rapidly. In addition, due to the opening of the price difference between China and the United States in the third quarter, methanol from the United States appeared for the first time, accumulating around 50000 tons. With the influx of a large amount of methanol into the domestic market, the potential pressure on port inventory has intensified. The average methanol port inventory in 2023 is about 910000 tons, a year-on-year increase of 9%.
Looking ahead to 2024, as the world's largest consumer of methanol, China still faces the impact of imported goods. Except for seasonal shutdowns in the first quarter, the operation of overseas existing facilities is basically stable. The annual changes in domestic import volume are closely related to the progress of new foreign production capacity. The new production capacity is concentrated in Iran and the United States. According to the plan, Iran will have two sets of 1.65 million ton methanol facilities, and the United States will have a total of 3.2 million ton facilities. In addition, Malaysia also has a 1.75 million ton facility planned to be put into operation in 2024. Therefore, while import profits still exist and overseas production is relatively stable, coupled with a large increase in production capacity, China still faces high import volume shocks. High port inventories may become the norm, or promote the backflow of imported methanol to the mainland market. However, factors such as overseas gas supply and changes in internal and external price differentials need to be considered.
4、 Consumption structure may gradually adjust, and demand tends towards diversified development
1. Due to the suppression of dual carbon and economic factors, it is difficult for MTO to have new increments
In 2023, the apparent demand for methanol is expected to reach 91.08 million tons, with a year-on-year growth rate of about 4.6%. The domestic downstream is still mainly focused on methanol to olefins, with a consumption of about 47 million tons of methanol, accounting for about 52%. Olefins have shown a weak and then strong trend throughout the year. From January to August, due to poor profits, the operation of external extraction units was relatively unstable, with frequent maintenance and shutdowns. At one point, shutdown units accounted for about 45%, and production was significantly lower than the same period in previous years. After August, with the restart of Silbon and Xingxing, the production of Baofeng Phase III was fulfilled. In addition, the continuous external procurement of CTO drove an increase in demand for olefins, leading to a significant rebound in production, gradually climbing over 90%, reaching a new high for the year. Although there was a slight decline in production in the fourth quarter due to the shutdown or load reduction of some units such as Changzhou Fude, it still remained at a high level for the same period.
Looking ahead to 2024, the current olefin profits are approaching breakeven, and the operating rate of the equipment has basically been fully utilized, with limited potential for future growth. The domestic olefin production capacity has exceeded 18 million tons, gradually entering the stage of overcapacity, and the enthusiasm for device production has decreased. As a high-energy consuming industry, coal chemical industry is currently under the dual pressure of dual carbon and economic efficiency, and there are no new olefin production projects in China. In addition, in recent years, propane dehydrogenation, ethane cracking, and large-scale refining facilities in coastal areas have continued to be put into operation. In addition, olefin monomers and polyolefins are also in a period of overcapacity, and the price center is constantly shifting downwards. The economic efficiency of outsourcing olefin monomers is significantly better than outsourcing methanol to olefins. Therefore, it is expected that olefin enterprises with conditions in the later stage may switch to outsourcing monomers to produce terminal products to alleviate their comprehensive profits, and the MTO process will face substitution risks, There is a possibility of phasing out outdated production capacity, and there may be a stock game in the future, which may limit the increase in demand for methanol.
2. Traditional downstream performance shows significant differences, and MTBE and acetic acid will bring certain increments
In 2023, traditional downstream demand has increased, with a demand for methanol of approximately 17.8 million tons, a year-on-year increase of 6.4%, accounting for 19.5% of the methanol downstream. The traditional downstream weighted average operating rate has increased, but the performance of the varieties varies. Among them, MTBE is one of the more eye-catching products that refineries must support. In recent years, with good gasoline profits, the demand for blending oil has increased, and benefiting from the adjustment of the gasoline consumption tax collection scope announced in June, MTBE is not included in the category of consumption tax collection for gasoline blending, further increasing the market demand for MTBE, From January to October, the apparent demand for MTBE in China reached 8.85 million tons, a year-on-year increase of 5.7%. In addition, due to the shortage of overseas oil transfer in 2023 and the significant arbitrage potential in exports, the cumulative MTBE export volume from January to October was 1.4204 million tons, a year-on-year increase of 12.76%. High demand promotes profit recovery, with theoretical annual production profits exceeding 1000 yuan/ton, accelerating new investment projects and resuming production of some long-term shutdown devices. MTBE production has significantly increased compared to previous years, and it has also increased in the opposite season in the fourth quarter. The annual demand for methanol is about 5.48 million tons, accounting for 6% of the total demand. In the remaining downstream, driven by the growth in demand for downstream PTA, vinyl acetate, and other products, acetic acid is still in a stage of high production capacity growth. A total of 1.3 million tons of new production capacity were put into operation within the year, with a total production capacity of 12.06 million tons, a year-on-year increase of 13%. Although the profit level has narrowed to some extent, it is relatively good in traditional downstream, so the operating rate is basically the same as last year. The annual consumption of methanol is about 5.48 million tons, accounting for about 6% of the total methanol demand. Formaldehyde and dimethyl ether have not shown significant improvement yet. In the sluggish environment of the real estate industry, the growth rate of formaldehyde production capacity has slowed down. In 2023, formaldehyde production capacity reached 36.8 million tons, a year-on-year increase of 2.66%, and the annual average operating rate has declined to 41.95%, which is at a low level in nearly three years. The annual consumption of methanol is about 4.56 million tons, accounting for about 5% of the total methanol demand; Dimethyl ether, on the other hand, is subject to policy restrictions. Due to stricter inspection of LPG blending, production has continued to be sluggish. The annual consumption of methanol is about 2.28 million tons, accounting for about 2.5% of the total methanol demand.
Looking ahead to 2024, traditional demand is more influenced by the transmission of economic recovery progress to the consumer side. Under policy stimulus, domestic demand growth may show weak recovery, and external demand is also worth looking forward to. Traditional downstream may bring some rigid demand, but there are certain differences between varieties. Based on the economic feasibility of MTBE as a gasoline blending component, MTBE demand is expected to continue to grow. Driven by high profits and high surface demand, there will be an increase in new MTBE investment devices in 2024, A total of 1.35 million tons; At present, acetic acid enterprises still have profits and the average production has not declined. Ice acetic acid still has plans to invest in new production capacity. It is expected that a total of 1.8 million tons of new production capacity will be put into operation in 2024, and both large units are planned to be put into operation in the first half of the year. There may be supply and demand mismatch caused by the production pace; The dimethyl ether and formaldehyde industries are in the stage of capacity replacement and clearance, making it difficult to achieve significant growth. Overall, traditional downstream demand support for methanol still exists, and MTBE and acetic acid will bring a certain increase.
Under the background of industrial green transformation, demand tends towards diversified development
Under the national strategic goals of low-carbon and environmental protection, benefiting from the development of the new energy and new materials industry, the emerging downstream methanol hydrogen production, methanol fuel (for vehicles and ships), as well as green and environmentally friendly products such as organic silicon and BDO, have performed quite well in 2023. Among them, the demand for methanol in emerging downstream organic silicon and BDO has steadily increased, reaching 2 million tons and 1.83 million tons respectively, accounting for 2.4% and 2.22% respectively; Due to its good cleanliness and efficiency, methanol fuel has lower costs and is more convenient to install compared to liquefied natural gas. It has risen to about 15% of methanol consumption, and the number of global methanol ship orders is also increasing year by year. In 2023, the number of new orders for methanol fuel transport ships has reached 120, nearly three times the number of orders from last year.
Looking ahead to 2024, under the background of industrial green transformation, demand tends to diversify and some downstream industries may become new growth points, such as BDO, methanol fuel, etc. Although their current volume is relatively small, their production capacity growth rate may accelerate. Among them, as a key material for degradable plastics, with the continuous promotion of "plastic restriction orders", the demand for degradable plastics may continue to be stimulated, Driven by demand, the growth rate of BDO's new production capacity is accelerating. It is expected that around 2.7 million tons of projects will be put into operation in 2024, contributing 2.16 million tons of new methanol demand; In terms of fuel, with the promotion of environmental protection policies and the continuous development of new energy, coupled with the cost of converting traditional fuel to methanol being reduced by 30% compared to liquefied natural gas, the shipping industry is accelerating the process of energy transformation, and the promotion of using methanol ship fuel to replace traditional energy is steadily progressing. In addition, ship types such as bulk carriers, chemical tankers, and automobile transport ships have also begun to choose methanol power. The use of methanol as a clean and environmentally friendly energy source will become increasingly widespread, and it may become the most potential demand growth point in the downstream of methanol. It is expected that there will be over 200 methanol ships globally in 2024, which will bring about 6 million tons of methanol fuel demand.
5、 Summary
Looking ahead to 2024, there is limited space below coal prices, natural gas prices remain stable, and cost support is still ongoing; Fundamentally speaking, under the background of "dual carbon" in China, the growth rate of methanol production capacity is slowing down, the pace of production process and device optimization will accelerate, and outdated production capacity will face elimination. However, it should be noted that there are many new methanol projects added overseas, which may lead to significant incremental risks in domestic imports or suppress port prices; The trend towards green and diversified development of demand, as well as the economic and production technology adjustments of olefin outsourcing, make it difficult for olefins to have new increments. Traditional demand is expected to bring certain increments, and some areas may become new demand highlights, such as BDO, MTBE oil blending, and methanol fuel. The changes in demand still affect the pace of the market. It is expected that methanol prices will mainly fluctuate in 2024, and the annual operating range may be between 2000-3000 yuan/ton, except for seasonal disturbances, During this period, attention should be paid to phased influencing factors such as macro sentiment, energy prices, internal and external price differences, and inventory changes.
JIN DUN CHEMICAL has built a special (meth) acrylic monomer manufacturing base in ZHEJIANG province. This makes sure the stable supply of HEMA, HPMA, HEA, HPA, GMA with high level quality. Our special acrylate monomers are widely used for thermosetting acrylic resins, crosslinkable emulsion polymers, acrylate anaerobic adhesive, two-component acrylate adhesive, solvent acrylate adhesive, emulsion acrylate adhesive, paper finishing agent and painting acrylic resins in adhesive.We have also developed the new and special (meth) acrylic monomers and derivatives. Such as the fluorinated acrylate monomers, It can be widely used in coating leveling agent, paints, inks, photosensitive resins, optical materials, fiber treatment, modifier for plastic or rubber field. We are aiming to be the top supplier in the field of special acrylate monomers, to share our rich experience with better quality products and professional service.
