Methanol: The contradiction between supply and demand has intensified, and the market decline is unstoppable

Methanol: The contradiction between supply and demand has intensified, and the market decline is unstoppable

From the perspective of the supply side, under the influence of winter gas restrictions, some natural gas installations in the southwest have shutdown plans in December, and some supply may be tightened, but the overall intensity is far less than in previous years; and the recent shutdown of installations in Northwest, Shandong, and Central China has resumed one after another. According to statistics from Yu Information, since mid-November, the operating rate of methanol in the Mainland has continued to rise. In addition, upstream methanol companies have a need to discharge inventory. In addition, Ningxia Kunpeng’s new production capacity is expected to store products, and the supply side of the mainland is obviously negative.

From the demand side, at the beginning of December, because Shenghong Refining and Chemical had already produced ethylene and propylene, the Sailborne MTO unit was shut down for maintenance as scheduled on December 3, and the manufacturer suspended the long-term methanol contract. Under normal circumstances, Sailborne Olefins consumes about 200,000 tons of methanol per month, and the shutdown of its facilities is obviously negative for methanol demand. The traditional downstream dimethyl ether and formaldehyde are already in the off-season of demand, especially under the influence of the epidemic, the sales of terminal products are not smooth, and the cost pressure is constrained by various aspects, forcing formaldehyde, dimethyl ether and acetic acid factories to reduce their load.

In terms of ports, the weather in November led to the closure of ports, which affected the unloading speed of methanol, and some cargoes in November were postponed to unloading in December. In East China, in addition to the shut down of Nanjing Chengzhi 1# and Zhejiang Xingxing olefins plant, the Sailbon plant was newly added for maintenance in December. Against the backdrop of increased cargo arrivals and significantly reduced demand, port inventories are expected to accumulate at a faster rate.

Although the introduction of new policies for the epidemic in many places this week, the control and prevention of the epidemic once boosted the futures market. However, under the pressure of multiple negative factors such as the intensification of the contradiction between supply and demand and the sharp drop in crude oil, methanol futures continued to fall, further increasing the wait-and-see sentiment of the industry.

  The start-up of methanol in the mainland is at a high level, and the import volume is expected to increase in December, while the start-up of olefins, which is the main demand for methanol, has further declined. The traditional downstream is tepid, and the inventory of downstream raw materials is mostly at a high level. The contradiction between supply and demand continues to intensify, and the short-term market is expected to run weakly.