Metallurgy / Chemicals / Rubber & Plastics

Since June, the domestic methanol market has continued to decline sharply due to the overhaul of the Northwest Methanol-to-Olefin Plant and methanol take-out. Among them, shipments in northern Shaanxi and Inner Mongolia dropped from 2350-2400 yuan/ton to 1900-1950 yuan/ton, a drop of over 19%; Shandong region received goods from 2550-2600 yuan/ton to 2170-2200 yuan/ton. The decline reached 15%. After the start of arbitrage in Northwest China and East China, the output of cans in East China dropped from RMB 2,750-2,800/ton to RMB 2,580-2,600/ton, a drop of more than 6%.

The imbalance between supply and demand in Northwest China affects the whole country

This round of domestic methanol market decline is the main force in the Northwest market, which originated from the maintenance of Shenhua Ningxia Coal Methanol-to-Olefin Unit in mid-May, and the methanol unit was not overhauled and methanol was sold out. At the same time, Ningxia Baofeng also reduced the burden of exporting methanol due to the short-term maintenance of the olefin plant, which broke the balance between supply and demand in the Mainland. Ningxia has shifted from a methanol procurement area to a methanol export area, which once created a supply pressure of 3,000 tons per day on the market.

The spring inspections of traditional methanol companies in Ningxia have ended, and they can only find another way to sell methanol. Qinghai and Xinjiang increased their sales to Sichuan, Chongqing and Guanzhong, which was transmitted to central China, causing prices in Hubei, Hunan and Henan to gradually drop. After the increase in sales pressure in northern Shaanxi and Inner Mongolia, the sales pressure in Shanxi, Hebei, and Shandong increased, and the tight balance of the market in the early stage turned to oversupply, and prices continued to decline.

After the surrounding markets fell sharply, arbitrage in Henan, Shanxi, Shandong and Jiangsu and Zhejiang markets began. After the continuous supply of goods to the ports and surrounding markets, the shortage of goods in East China eased and prices fell. It can be seen from the magnitude of the price drop that the Northwest market price has fallen the most, which is the key point of the current supply and demand imbalance. The price drop in the Central China and Shandong markets is in the middle, which is a passive impact. The East China market has the least price fluctuations and is the affected area.

The overhaul of the methanol-to-olefin plant in Ningxia has gradually ended, and the export of methanol will be gradually stopped this week. The inland market will return to the balance of supply and demand, and the price drop is expected to slow or end.

The market in the off-season of consumption shows weak supply and demand

In the rainy season, traditional downstream demand has gradually weakened, and the expected seasonal decline in the start of formaldehyde and dimethyl ether. Recently, acetic acid has also declined after several installations have been overhauled. MTBE has also shown signs of weakening due to the decline in the load of the refinery. According to the situation of the same period in previous years, this situation will not be alleviated until the end of June or even July.

As far as methanol-to-olefins is concerned, the overhaul has not yet ended. Most of the methanol-to-olefins plants in coastal areas were overhauled at the end of last year and early this year, and the probability of overhaul before the end of the year is small. Inland methanol-to-olefin plants are currently undergoing inspections. Among them, the 600,000 tons/year of Inner Mongolia China Coal Mengda and Inner Mongolia Jiutai’s 600,000 tons/year of external methanol extraction devices have a greater impact. At present, the two sets of devices will be overhauled from the end of June to mid-July, and the external mining will be reduced by about 200,000 tons.

In terms of methanol, the supply in July is also expected to decrease. It is currently reported that 9 sets of methanol plants with a total capacity of 5.5 million tons/year in the northwest and Shandong regions will be overhauled from the end of June to mid-July, and most of the plants are located in the northwest region and will be effective. Alleviate the current situation that the supply of methanol in the Mainland exceeds the demand. Looking at the market outlook, weak supply and demand will be the main tone, and a new round of the spot market may start in mid-July.

Affected by the continued weakness of the spot market, domestic methanol futures fell, and the current market outlook is now declining simultaneously.

In summary, due to the recent maintenance of the methanol-to-olefins plant in the Mainland, the market weakness caused by the export of methanol will come to an end this week. However, the traditional downstream off-season and the maintenance of the methanol plant will cause the subsequent market to show a weak supply and demand situation. This is currently expected The situation will ease around mid-July. The current simultaneous decline in the methanol market is expected to have a respite from the stabilization of supply and demand in the Mainland, but the short-term still does not have a sharp rise or maintains oscillations. The market outlook still needs to pay attention to the mismatch of supply and demand in the Mainland market.