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Insight | Time: May 27 2020 10:28AM
Tank operators increase storage fees for methanol
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China coastal methanol inventory has been increasing since the beginning of 2020. It has reached 1.05 million tons as of the week ending May 21 (including tank inventory in both East and South China ports), compared to 0.75 million tons in the same period of last year. As a result, tank storage space is reaching the maximum capacity. It is said that vessels at East China ports now have to wait for 15-20 days to discharge cargoes. In order to enhance the circulation of goods, several tank operators have raised the storage charges for methanol.

In mid-May, Changzhou Jintao increased the storage fees. It charges investors 3yuan/mt a day four days after the delivery date, and increases the charges by 3yuan/mt every week. Hence, investors should pay 270yuan/mt a month if the goods are not cleared within a month.

Changjiang International announced on May 18 that the charges for storage of methanol will be increased to 2yuan/mt a day starting from Jun 1. Afterwards, Yangtze Petrochemical raised the fees to the same level.

Taicang Power Shell increased the storage fees in the first 7 days after the free time to 1.5yuan/mt a day, 3yuan/mt a day in the second 7 days and further to 5yuan/mt a day in the third, starting from Jun 10.

(Changzhou Jiantao, Changjiang International, Yangtze Petrochemical and Power Shell are port reserves in Jiangsu Province, East China.)

According to the statistics, methanol cargo arrivals maintained high this year. In May alone, about 1.14 million tons of methanol cargoes are expected to arrive, up 42% year-on-year and 9% month-on-month. In June, Saudi Arabia’s Sabic is expected to export 250kt of methanol to China, up about 200kt, therefore, China’s imports in Jun would stay high.

On demand side, operating rates of methanol’s downstream derivatives hover low. Profits of formaldehyde and DME are meager, while that of acetic acid maintains good. However, plant operations are affected by the measure to stem the coronavirus and requirement of environmental protection during the Two Sessions from May 21 to 28.

Demand was yet to recover, and methanol piece continued correction. Crude oil price rose in May, and methanol futures were bolstered, supporting methanol spot market. However, with the delivery of May contract for methanol futures completed and crude oil pulling back, methanol futures and spot market softened.

Methanol supply and demand fundamentals are little changed, and tight storage space continues to weigh on prices.
[RISK DISCLAIMER] All opinions, news, analysis, prices or other information contained on this report is provided by analyst of Zhejiang Huarui Information Consulting Co., Ltd (CCFGroup) as general market commentary and does not constitute investment advice. CCFGroup will not accept liability for any loss or damage, including without limitation to, any loss of profit, which may arise directly or indirectly from use of or reliance on such information.
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