Imports decrease, methanol is bullish in the medium term

Considering that the severe cold in winter still exists, the load of Iranian installations will be reduced, and imports will be difficult to increase in the next two months. At the same time, the Hebei epidemic has led to an increase in freight costs, and the cost of arbitrage from mainland sources of goods to ports has risen. Therefore, the room for continued decline is limited, and the market outlook is mainly bullish. 

The recent sharp decline in the methanol market is mainly due to three aspects: First, the early rise has led to a decline in downstream profitability, and some traditional industries have maintained cost lines, and the demand side is difficult to follow up. Second, the supply side has new capacity and put into production. , The Shenhua Yulin plant was put into operation smoothly at the end of 2020, and the supply increased; third, the recent epidemic in Hebei broke out again, and some downstream factories were forced to stop production. However, considering that the severe cold in winter still exists and the start-up load of Iranian installations will be reduced, it is difficult to increase imports in the next two months. At the same time, the Hebei epidemic has led to a rise in freight costs, and the cost of arbitrage from mainland sources to Shandong and ports has risen. Therefore, the room for continued decline is limited, and the market outlook is bullish Mainly.

　　Import shrinkage

　　In December 2020, methanol imports amounted to 1.0239 million tons, a decrease of 82,900 tons from November, or 7.49%. For January and February 2021, we expect that the import volume will remain low.

First of all, from the perspective of price, the current domestic methanol CIF price is US$307.5/ton, while the price in Southeast Asia is US$372.5/ton and the European price is US$425/ton, which are significantly higher than the domestic CIF import price of methanol. There is room for arbitrage. Most cargoes are willing to go to high-priced areas outside of China to make a profit, and the number of cargoes to change ports and direct shipments continues to increase.

　　Secondly, affected by severe cold weather, gas restrictions began in the Middle East in late December last year, and the operating load of Iran's methanol plant dropped to 60%, which is expected to continue to decline in the later period. Approximately 2.41 million tons of installations in Southeast Asia were shut down for maintenance, and Trinidad and Tobago also had several installations shut down for maintenance. Therefore, foreign methanol production will be reduced later.

　　 Finally, from the perspective of shipping schedules, the number of non-Iranian cargoes arriving at the port in January began to shrink. It is estimated that methanol imports in January will be between 980,000 and 1.01 million tons, and the volume of exports will increase in January, which is estimated to be between 40,000 and 50,000 tons, which will be exported to Europe, Southeast Asia and other places. However, China's methanol imports in February are still difficult to increase significantly. Some high-priced regions directly or indirectly purchase imported goods in February in advance, resulting in a relatively tight situation in China's non-Iranian methanol arrivals in February.

　　Inventory remains stable

　　The current coastal inventory of methanol is 1,170,100 tons, and the overall supply of methanol in coastal areas is estimated to be around 253,000 tons. In mid-to-late November last year, the arbitrage window for some regions in East China and the mainland opened. In December, some automobile and shipping cargoes from Henan, Shandong, and Tianjin arrived in East China. In addition, the overall cargo delivery volume in Jiangsu is relatively average, and Jiangsu's two closures have had a greater impact on the unloading of imported cargo. Inland, the inventories of companies in China's main methanol producing areas showed a downward trend. Enterprise inventory can only maintain production demand for 6 days, which is significantly less than the normal situation of 9 days in previous years.

　　 supply and demand pattern

　　 From the perspective of start-ups, the current start-up of the methanol industry has declined slightly, and the overall domestic methanol installation load is 69.40%. Although some installations in Jiangsu, Anhui, and Shandong are operating stably, the temporary shutdown of some methanol installations in Northwest China has led to a decline in the country's methanol operating load. Downstream industries also started to decline, but in comparison, the downstream demand side declined more obviously, mainly due to the decline in profitability. The early methanol price rose. Except for a few downstream products such as acetic acid, the profitability of most downstream industries increased significantly. All of them have shrunk to varying degrees. The profit of the main downstream methanol-to-olefins main equipment in East China in December last year decreased by nearly 200 CNY/ton from November, a drop of nearly 15%.

　　 In summary, we believe that the short-term decline in methanol is difficult to continue, and we can choose more opportunities.