Methanol supply increases and demand decreases and prices fall

Recently, the market reported the news of Sirbang's shutdown and maintenance. Affected by this, the methanol disc is generally weak. With the shutdown and maintenance of Sirbang, it is expected that methanol will accumulate significantly in December, and the price may fall in the later stage.

From the demand side, in early December, because Shenghong Refining had produced ethylene and propylene, Sirbang decided to suspend the methanol long-term contract, and the MTO plant began to be shut down for maintenance on December 3. According to the analysis of the market situation, after the downstream of Shenghong refining ethylene is ready, the equipment for shutdown and maintenance can be restarted, and it will take 2-3 months at the earliest. Under normal circumstances, Sirbang's monthly methanol demand is about 200,000 tons, so before the recent shutdown and maintenance equipment restarts, Sirbang will reduce the monthly methanol demand by about 140,000 tons, which will form a significant negative feedback on methanol demand. In addition, considering that MTO profits are still losing a lot at present, it is unlikely that the MTTO equipment that has been stopped will be restarted in the near future.

From the perspective of traditional downstream demand, the peak season of downstream construction from September to October was not strong, and the start of construction in November was generally flat. Specifically, since October, formaldehyde starts have increased from 30.74% to 31.56%, considering that December is the demand off-season, and the 2023 Spring Festival is earlier than previous years, it is expected that the start of construction may decline; The start of acetic acid in November fell from 78.51% to 75.23%, and there was no maintenance plan in December, and it is expected that the start will increase month-on-month. Considering that December entered the demand off-season, and the traditional downstream new production capacity was limited before the end of the year, it is expected that the overall start of methanol downstream in December will be difficult to increase, and the possibility of decline cannot be ruled out.

All in all, there is an expectation of a decline in MTO parking at the MTO end in December, and it is difficult for the traditional downstream to have significant room for improvement, and MTO demand is expected to decline significantly in December. It is recommended to pay close attention to the restart time of MTO units that were shut down in the early stages and the growth in methanol fuel demand as temperatures cool.

From the supply side, domestic methanol starts have recently rebounded from 70.79% to 71.47%. With the gradual gas restriction in the southwest region, it is expected that the room for methanol start improvement is limited. In addition, the 600,000-ton coal-to-methanol plant in Kunpeng, Ningxia, has not yet produced products due to the sudden drop in temperature, and it is still being adjusted. Ningxia Baofeng's 2.4 million tonnes coal-to-methanol plant will be delayed until 2023, and even if Ningxia Kunpeng can stabilize production in December, the release of new supply will be limited.

At the same time, due to the impact of weather and concentrated queues for unloading, ports have been continuously closed or blocked, and it is estimated that methanol imports in November have been sharply lowered to 890,000 tons, and some cargo sources will be postponed to December. In addition, the start of methanol in November increased month-on-month, and imports are expected to increase significantly in December, currently estimated at around 1.02 million tons, but due to the recent increase in rain and snow, the actual unloading volume is expected to be lower than expected.

Based on the above analysis, the supply and demand of methanol increased and decreased in December, and the price may continue to fall. In addition, with methanol prices under pressure, MTO spreads are expected to expand in stages.