Oversupply remains unchanged
Under the combined effect of rising crude oil prices, easing economic and trade frictions and falling market interest rates, methanol prices began to rebound at the bottom in early June. Methanol futures rose to 2,429 yuan/ton on Friday, up 8.44% from the low on June 6. However, judging from the two trading days before this week, the 60-day average is more repressed.
| Melamine |
Safety Inspection Causes Small and Medium-sized Enterprises to Reduce Load Production
Since the third quarter of 2018, methanol prices have been declining unilaterally, and the operating conditions of manufacturing enterprises have continued to deteriorate. At present, the profits of coal-to-methanol production enterprises are 300-400 yuan/ton, while those of natural gas-to-methanol production enterprises in Southwest China are in a loss state. In view of this, the supporting role of cost-side on methanol price began to appear, and the recent rise in methanol price was largely caused by the profit recovery of methanol production enterprises.
Recently, the start-up load of intensive overhaul units in methanol production enterprises has dropped from 71.7% to 67.4%. The decline in supply is an important reason for price rebound. However, according to the announcement, from the end of June to July, the pre-maintenance devices will be reworked one after another, involving capacity of 5 million tons per year.
However, last weekend, Shandong released the Implementation Plan of the Special Regulation Action for Safety Production in the Chemical Industry and Chemical Parks of the Province, which began to check the safety situation of chemical enterprises in the province. For those enterprises that do not comply with the safety regulations, they are required to rectify within a specified time limit, and if they fail to rectify on time, they will be shut down. This could reverse expectations of oversupply.
| EDTA |
As we all know, Shandong is the main methanol producing area in China, and its production capacity accounts for 10% of the total national production capacity. Moreover, some methanol production enterprises in Shandong Province are small in scale, and the problems in safety inspection are prominent. The start-up load of enterprises is bound to decline, which will help to alleviate the problem of excess supply of methanol in the methanol market. However, the inspection is aimed at Shandong Province. Shandong Province has not only methanol production enterprises, but also many traditional downstream methanol enterprises. These enterprises are also small in scale, and the safety and environmental protection supporting devices are not perfect. It can be said that the safety inspection in the short term will cause the market to worry about the supply of methanol in the later period, and play a supporting role for the price of methanol, but the long-term impact is more complex.
Deposit at the port will come to an end
Since March, methanol prices have continued to decline, accelerating the process of port inventory. As of June 20, port methanol stocks stood at 1047.2 million tons, down 92.0 million tons, or 8.08%, from the beginning of March when methanol prices began to fall. Among them, the port inventory was 671,000 tons, down 192,000 tons from the beginning of March, a decline of 22.25%; the mainland (Northwest, Central China, North China, Southwest, Northeast) inventory was 376,200 tons, up 67,500 tons from the beginning of March, an increase of 21.87%.
However, at present, the import arbitrage window is open, and the market expects that the domestic arrival in July will be large, the supply pressure in East China will increase, and the process of port inventory will come to an end, which will lead to pressure on methanol prices.
At the same time, although downstream coal-to-olefin plants such as Nanjing Zhicheng are expected to put into operation, the overall demand for methanol is difficult to improve in the off-season of traditional downstream consumption, and the problem of market oversupply will not change in a short time.
| Azodicarbonamide (AC foaming Agent) |
Future Market Forecast
In the short term, methanol prices will continue to rise due to changes in the surrounding market climate and the impact of Shandong security inspection. However, due to the current situation of oversupply, the upstream height is limited, and short-term buying is the main operation. If the price can rebound to 2500 yuan/ton, then try short.