Methanol remains consolidating after market

The Chinese methanol market is in a supply-over-demand pattern, but production is caught in losses. With cost support and supply and demand side suppression, the methanol 2109 contract is expected to continue to oscillate in the aftermarket.

Since late June, the methanol 2109 contract has seen a slight rebound after the construction of the W-bottom pattern, rising to RMB 2,600/mt from RMB 2,430/mt. However, due to the weak fundamentals of methanol itself, the futures price continued to rise weakly.

Recently, the phenomenon of high premium for domestic port methanol basically disappeared, and there are two main reasons behind the return of valuation: one, after the end of spring maintenance of methanol plant, the supply of mainland methanol gradually increased, which led to the decline of mainland spot prices, the port arbitrage window opened, part of the low-priced mainland sources of goods hit the port market. Data show that the newly put into operation China Coal Enneng's 1 million tons/year capacity unit reached full load in mid-June, and the Northwest inventory has climbed for 3 consecutive weeks since the end of May. Data from Goldlink shows that the average domestic methanol plant start-up rate was 70.50% as of June 25, up 0.23 percentage points week-on-week, 3.48 percentage points year-on-year, and 3.06 percentage points higher than the average value of the same period in the past three years. According to the trend of methanol plant start-up rate in the past 7 years, the methanol plant start-up rate will bottom out at the end of June, which means domestic methanol production will continue to increase in the second half of the year.