Recently, the methanol market, which has been silent for one month, has witnessed a wave of growth. As of February 18, the mainstream reference price of domestic methanol market was 2 280 yuan (ton price, the same below), up 3.45% from the beginning of the month. Among them, the market prices of Shaanxi and Inner Mongolia rose by about 50 yuan, Shandong by 20 yuan and Jiangsu by 20 to 40 yuan.

Industry insiders believe that the methanol port inventory has accumulated to a historic high, coupled with weak downstream demand, the methanol market continues to rise powerlessly.

HISTORICAL HIGH PORT STORAGE

Ma Nan, a methanol distributor in Liaoning Province, believes that due to the sharp increase in imports of methanol in the past two months and the impact of port depots and handling during the Spring Festival holidays, the recent accumulation of methanol port stocks has climbed to a high level in the same period in history, putting greater pressure on the market.

Statistics show that methanol imports reached 717,200 tons in December 2018, an increase of 136,700 tons compared with November, an increase of 23.56% over the same period; methanol imports reached 870,000 tons in January 2019, which exceeded the average level of 150,000 tons in the same period, and port inventory has climbed to a historical high. At present, the inventory of methanol port has exceeded 1 million tons and increased to 1.085 million tons. Affected by the Spring Festival holidays, the speed of discharging and unloading is relatively slow. Some port warehouses carry about 750 tons of goods per day, which is less than 70% of the normal time. In addition, the recent import sources will come to the port one after another, and the port inventory may further increase.

“At present, the inventory of ports in East China is 610,000 tons, and in South China it is the first time that it exceeds 200,000 tons. The total of the two is over 800,000 tons, which is about double the average level in the past five years. The huge accumulated inventory will exert significant pressure on the market and depress the price of methanol to continue to rise. Ma Nan said.

Centralized maintenance has little effect.

In the near future, the methanol market will usher in a period of centralized maintenance at home and abroad, and the supply is expected to decrease. However, in the case of the re-production of methanol plant from natural gas, the commissioning of new plant and the rise of industry start-up rate, the impact of plant overhaul on the market is not significant.

Ma Nan’s analysis shows that with the warming of the weather, the spring overhaul of methanol plants in China is about to begin. In March and April, the overhaul capacity is nearly 10 million tons, and about 80% of the overhaul capacity is concentrated in the Northwest region. Subsequently, in May and June, some installations in Shanghai, Qinghai and other places also had maintenance plans. However, compared with previous years, this year’s maintenance loss capacity is basically flat, and will not have a particularly significant impact on the market.

Internationally, KMI’s 660,000 tons/year plant, Qatar’s 900,000 tons/year plant and Malaysia Petronas Petrochemical Company’s 1.7 million tons/year plant are all in the phase of shutdown or planned maintenance in the near future, and the supply of methanol in the overseas market will be tight. However, foreign equipment maintenance usually first ensures continuous long-term supply, so it has little impact on domestic market supply.

On the other hand, with the end of the peak period of heating gas in winter, a large number of natural gas methanol plants will resume production, which will promote the industry start-up rate.

According to Dong Chao, an analyst at Shenyin Wanguo Futures Research Institute, natural gas methanol plants such as Jiuyuan, Kabella, Chuanwei and Lutianhua will be restarted in early February, with a total capacity increase of about 1.65 million tons per year. And a large number of natural gas methanol plants will be opened in the later period. At the same time, Hengli Petrochemical’s new 500,000 tons/year methanol plant is also planned to be put into operation in the first half of this year, which will further increase the supply of goods. Therefore, although there are domestic equipment routine overhaul support, but the re-production and new production devices will offset the loss of overhaul capacity, overhaul will not have a greater impact on market supply.

Weak downstream demand performance

At present, just after the Spring Festival holidays, the traditional downstream enterprises of methanol have a slow recovery, limited substantive production and weak demand performance. Emerging demand for methanol to olefins is affected by the market, and the start-up rate is not high, so it is difficult to form a strong support for the methanol market.

Ma Nan introduced that the overall performance of traditional demand is general, and recovery still needs some time. At present, only a few manufacturers in the formaldehyde industry return to the market, the industry start-up rate has dropped sharply, manufacturers mainly wait-and-see finishing, the market atmosphere is still light; dimethyl ether, some plant shutdown or negative operation led to a decline in the start-up rate, some start-up enterprises due to sufficient pre-holiday stock, but also in a centralized digestion of inventory, the overall trend is weak.

In terms of emerging demand, due to the persistent weakness of PP and PE markets, the profit of domestic methanol olefin industry has declined, and the enthusiasm of enterprises has been affected. The average start-up rate of the plant is about 82%, down 0.59 percentage points from last month, which makes it difficult to drive methanol demand.

Generally speaking, the port inventory at the historical high level, the repairing of overhaul capacity by re-production and new plant commissioning, and the overall weakness of downstream demand make the current rising methanol market continue to have insufficient momentum. It is expected that the downward breakthrough of the methanol market will become a probable event.