Methanol has been in the era of low prices for a long time

In late April, domestic methanol companies were overhauled, demand recovered slowly, and stocks in port areas remained above 1 million tons, which combined with the impact of low crude oil prices and general decline in energy products. The methanol market may be in an era of low prices for a long time.

Limited supply and demand structure improvement

Although some domestic enterprises overhauled in April, the methanol plant operating rate dropped from 70% at the beginning of the month to the current 66%, but the downstream is still recovering slowly, the demand has not increased much, plus the previous methanol inventory is high, and the supply and demand structure is relatively limited. This week, the spot price of methanol in northwestern Shaanxi and Inner Mongolia has fallen to 1,300-1,350 CNY/ton, and the receiving price in Shandong has fallen to 1,450 CNY/ton, both hitting new lows this year.

From the perspective of methanol and downstream operations, the current domestic methanol plant starts at about 66%, which is 7 percentage points lower than before the Spring Festival and 1 percentage point lower than the same period last year. The effect of maintenance and production reduction is obvious. However, in the downstream market, the removal of formaldehyde has improved compared with that before the holiday, and the rest of the downstream operations have not recovered to the pre-holiday level. Compared with the same period last year, the downstream start of acetic acid only increased by 9 percentage points, but it still fell by 12 percentage points compared with before the Spring Festival.

Downstream operations are being resumed one after another. Except for acetic acid entering the seasonal maintenance period, the rest of the downstream operations have improved significantly since the Spring Festival and the beginning of the month. The domestic supply and demand balance has been basically achieved, but the import volume to the port has not decreased, and the port stocks are relatively large. Prices continued to fall sharply, and market confidence was clearly insufficient.

The world is facing industry reshuffle

From the perspective of global supply and demand, China accounts for about 53% of global methanol production and 62% of consumption, which is basically a dominant company. The main overseas production areas are located in the Middle East, Gulf of Mexico and South Pacific (Southeast Asia, New Zealand). As the world's largest methanol-consuming country, China imports about 9 million tons annually, mainly from the Middle East, Southeast Asia, New Zealand and South America. At present, the global downstream construction has declined to varying degrees, and the Chinese market is particularly important to the world.

The excessively low oil prices this year have caused China's gasoline and diesel consumption to decrease, exports to be reduced, and large inventories, which squeezed part of the tank capacity of methanol, which is also a dangerous product of the three types of media. . This caused relatively tight methanol storage tank capacity in China. Since the beginning of the year, the coastal inventory of methanol in China has remained high. Up to now, there are still more than 1 million tons of methanol inventory. Downstream consumption is slow, imports to ports have increased, and methanol ships in the port area have queued for unloading. The continuation of this phenomenon, on the one hand, has caused China's methanol inventory to remain high; on the other hand, it has caused the shortage of methanol transportation vessels, and most overseas markets are currently facing the risk of expansion. In the absence of improvement in global downstream demand, the only way to solve this problem is to reduce production through maintenance.

It is inevitable that the global methanol industry will reshuffle. There have been a large number of domestic enterprises that have been discontinued due to prices below cost, and some backward devices are facing elimination. Restricted by tank capacity and transportation, the international methanol industry is also facing the same dilemma. The pattern of global methanol supply exceeding demand is expected to be resolved this year. Only when the methanol plant is shut down until the production capacity is less than the downstream demand, the methanol market can achieve a real balance between supply and demand, and gradually realize that supply is less than demand, and then destock, so as to achieve the healthy development of the entire industry. At present, this cycle may last 3-6 months, during which the methanol price will continue to oscillate at a low level, and it is difficult to make a big improvement.