Methanol: Review of domestic market conditions in the third quarter

Methanol: Review of domestic market conditions in the third quarter

In the third quarter, my country's methanol market first rose and then fell. Overall, the downward trend was terminated, and the market closed with a rising trend in the traditional peak season.

Due to the high load of overseas installations, the import volume in July reached a new high for the year, and the port delivery speed failed to match the arrival volume, which kept the port inventory high, and the main contract fell below the new low of the year in July. Inventory pressure, and four sets of methanol plants in Iran have been overhauled one after another since the middle of the year. Combined with the shortage of transportation capacity, Iran's shipment volume has been significantly reduced month-on-month. The expected arrival at the port in the far month has improved, and the balance of supply and demand at the port has been restored. The mainland is facing the dual pressure of cost and supply. On the one hand, the backflow of ports has suppressed the price of methanol in the mainland. On the other hand, the price of chemical coal in the peak season of electricity consumption is strong, and the profits of coal-based enterprises have suffered significant losses. Under the support of overhaul due to profit pressure and reduction of coking production, the supply and demand situation in the mainland has also been repaired.

The turning point of the market in the third quarter was in mid-August. There was no obvious window period in the coal market, and the coal price remained strong between the daily consumption of power plants and the replenishment market in winter. The start-up of Iranian installations is still very unstable. After the import shrinkage in August and September is realized, the port spot has entered a strong period. Gas restrictions in the Sichuan-Chongqing region and some unplanned maintenance also made the upstream enter September with a better inventory situation.

After the successful restart of the olefin plants in East China and Shandong, the rigid demand for olefins has supported the market steadily. The traditional demand for methanol has improved near the traditional peak season. The existence of the Mid-Autumn Festival and National Day holidays also makes the stocking operation more concentrated than usual, and the market is supported by many parties. start to rise. The port performance is stronger than that of the mainland, and the negotiated price of the external market is higher, while the depreciation of the RMB exchange rate has accelerated the rise in import costs, and the port inventory has continued to decline. Repeated 21 years, the market has strengthened sharply.

From the perspective of the fourth quarter, the market is still quite supportive in the early stage. At important meeting points, coal prices are easy to rise and hard to fall. Under the background of RMB depreciation, import costs have risen passively. Ports will remain in the low inventory range in the short term, and the space below methanol will become more and more solid.

However, looking forward to the entire fourth quarter, global demand is unlikely to improve amid the pace of Fed rate hikes. The comprehensive profit of olefins has not been able to improve, and the demand side has little room for growth again. In a low-profit environment, it is not ruled out that olefins units will be increased overhauls. With the stable operation of the Middle East installations, the import supply in the Middle East may have bottomed out and rebounded before the gas restriction in the Middle East, and the trend of port destocking has ceased. At the same time, the newly built installations in the northwest have been producing products one after another, and the loosening of the supply and demand balance is bound to suppress the upward price space. The profit distribution among coal-methanol-olefins has always been contradictory, and the market operation trend is expected to still fluctuate between costs and downstream profits.