Spring inspection is far less vigorous than anticipated methanol decline.

Since the beginning of the year, the overall price trend of methanol has oscillated broadly. In recent years, although there are good support for the centralized overhaul of domestic plants in spring and the commissioning of new methanol-to-olefin units, methanol is weak under the pressure of high inventory. In the latter stage, when imports from overseas are concentrated in port and the outflow of hedging sources is imminent, the pressure of methanol inventory will be released completely, and both the current and future prices will be depressed.

Domestic spring inspection is not up to expectation

Domestic methanol plant parking maintenance has obvious seasonality, generally concentrated in spring and autumn, and the strength of spring inspection is far greater than that of autumn inspection. Last autumn, the production profit of methanol was far higher than the average level. Many enterprises shortened the maintenance days and even delayed the maintenance time. For this year's spring inspection, the market generally believes that with the decline of methanol production profits, this spring maintenance will be significantly stronger than last year.

In early March, the market began to ferment the speculation of spring inspection, but as time went on, it gradually proved that the process of spring inspection was not as expected. In April, the spring overhaul that the methanol market has been waiting for has finally begun. Last week, the national start-up load of methanol dropped from 72.3% to 66.51%, and that of Northwest China from 83.89% to 75.65%. Although the load has dropped sharply, it is still higher than the same period in previous years. According to the current overhaul plan, about 2.3 million tons of production capacity will be repaired next week, and 1.46 million tons of production capacity will be restarted. The total overhaul loss capacity will be about 840,000 tons, or the load will be reduced by about 1%. Starting in late April, the pre-maintenance devices will be restarted one after another, and the load is expected to recover at a low level. Overall, the methanol load during the spring methanol inspection this year has been higher than the same period in previous years, far less than the market expected maintenance efforts. In addition, the substantial impact of spring inspection is further weakened by the supply increment brought about by the smooth commissioning of the new device. Shandong Luxi 800,000 tons and Hengli Petrochemical 500,000 tons of production capacity have basically been stable operation, Heilongjiang Baotailong 600,000 tons and Jiangtao Lubao 200,000 tons of production capacity plant in the test run, is expected to start selling methanol in the second quarter. 

Overseas methanol plant overhaul concentrated in April-May last year, but this year was generally advanced to 1-March. The main reasons for the early overhaul lie in: last October, the outbound methanol olefin plant, represented by Xingxing, Zhejiang, stopped or reduced its load, resulting in the continuous increase of methanol stocks in coastal areas of China, the shortage of tank capacity, and the delays in unloading of imported cargo sources. Delay or change port unloading. Affected by this, the major overseas suppliers of methanol have to carry out maintenance ahead of time in an attempt to alleviate storage pressure by reducing supply.

Up to now, the main equipment repaired overseas has resumed production, and a new round of supply pressure is coming. Indonesia's 660,000 tons, and Malaysia's 1.7 million tons of equipment have been repaired from mid-February to mid-March. The 1.65 million tons in Marjan, 1.5 million tons in Oman and 1.65 million tons in ZPC-2 were all restarted at the end of March. According to estimates, methanol production in the Middle East and Southeast Asia in April will increase by about 400,000 tons compared with March. Overseas supply pressure is very severe.

Demand has contraction risk

After the major explosion accident of Xiangshui in Yancheng, departments at all levels throughout the country have increased safety inspection of chemical enterprises, and enterprises that fail to meet the standards have been restricted or shut down for rectification. Methanol and olefin enterprises are mostly large-scale enterprises with standardized daily management and little impact of safety inspection. However, the traditional downstream of methanol is mostly small and medium-sized enterprises. Daily management is chaotic and some enterprises have incomplete related qualifications, which is the disaster area of this round of safety inspection.

Following the launch of safety inspection, the traditional downstream start-up rate dropped rapidly from 52% to 44%, from the highest level in the same period in history to the lowest level, and the demand for methanol continued to shrink. Specifically, the acetic acid industry is most affected, with the start-up rate dropping from 90% to 64%. The main reasons are as follows: First, downstream acetic acid is the intermediate of pesticides, medicines and dyes. These industries are the most important part of this safety inspection. All enterprises that fail to meet the standards are restricted or closed down, resulting in a significant shrinkage in the demand for raw material acetic acid. Secondly, acetic acid is used as solvent in PTA production process. At present, PTA industry is in the period of centralized maintenance, and the demand for acetic acid is shrinking. The overall contraction of demand resulted in the downward profit of acetic acid production, the background of safety inspection, the strong willingness of enterprises to overhaul, and ultimately led to a significantly lower load.

The start-up load of formaldehyde also decreased by 26% from 33%. Formaldehyde is mostly small and medium-sized enterprises, the industry standard is poor, in the inspection of enterprises without production qualification certificates are all shut down, resulting in a significant reduction in the load. In recent years, although the formaldehyde production load has an upward trend, there is limited room for improvement in the later period. With the arrival of summer, accidents are more likely to occur when the temperature rises. Therefore, safety inspection will continue and enterprises that do not conform to the norms will be put an end to "illness" and resume production.

Other traditional downstream start-up rates such as dimethyl ether and MTBE load slightly declined. Generally speaking, under the background of safety improvement of chemical enterprises, it is difficult for traditional downstream industries to restore the start-up load smoothly, and the demand for methanol is at risk of contraction.

Emerging downstream methanol-to-olefin enterprises are large-scale enterprises with standardized daily management and almost no impact of safety overhaul. Frequently-opened units are basically running stably. The methanol-to-olefin load has stabilized around 80% in the last two months, and the start-up level is at a high level in the same period in history.